CONFIDENTIAL

ANSWER BOOKLET
FACULTY ACCOUNTANCY
PROGRAM CODE AC220
COURSE CODE CRG650
LECTURER’S NAME DR AIDA HAZLIN ISMAIL
DATE OF EXAMINATION 28 JULY 2021

STUDENT NO. 2 0 1 9 6 8 9 3 7 4
STUDENT’S GROUP AC220B6T
TOTAL PAGES USED PAGES

UiTM’s  I agree to act in a manner that is consistent with UiTM’s academic

ACADEMIC assessment and evaluation policy and processes. I will practice integrity in
regard to all academic assessments, and pursue scholarly activities in UiTM
INTEGRITY in an open, honest, and responsible manner. I will not engage or tolerate
PLEDGE acts of academic dishonesty, academic misconduct, or academic fraud that
include but are not limited to Cheating, Plagiarism, Fabrication,
Deception or Furnishing False Information.
 As a student of UiTM, I am expected to conduct myself in a manner that
exemplifies honesty and integrity. If for any reason, I am found to be
violating the policies set out by UiTM, I understand that disciplinary action
can be taken against me.
Source: UiTM’s Academic Integrity Pledge

EXAMINERS’ VERIFICATION: Question No. Marks

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PART A
1. B
2. B
3.C
4. C
5. B
6. B
7. A
8. A
9. A
10. A
11. A
12. C
13. B
14. D
15. B
16. D
17. D
18. A
19. A
20. B

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PART B
Question 1
a) Generally, the public expects business to act ethically and conform to ethical
behavior. The first factor is sense of morality. The public expects the businesses to
practice a sense of morality in their operation, not just focused on profit. For example,
by not employing child labor, avoid discrimination in workplace by treating everyone
equally and respecting other people’s beliefs, races and religion. In this case, Zarul
should exercise a sense of morality by not stealing from Puan Ya who had bestowed
trust on him to handle the finances of the company.
The second factor is financial malfeasances. The public expects businesses to be
honest and not involved in financial scandals. This is because fraud and corruption
have resulted in collapse of huge corporations which later affects the shareholders.
This will later tarnish the trust of the public towards the management of the company.
In this case, Zarul be honest and not commit fraud from the company by betraying
the trust given by the shareholders of the company.

b) The first type of justice to be given to Zarul for what he has committed in Mulia
Prihatin is Compensatory Justice. Compensatory justice is about compensating
people who were wronged by others for what they have lost. The amount of
compensation should be the same as the amount of loss suffered by the
compensated person. For example, compensating a victim’s family involved with
road accident. In this case, Zarul should compensate the amount of money he took
from Mulia Prihatin.
The second type of justice to be given to Zarul is Retributive Justice. Retributive
justice is the imposition of punishment and penalties upon anyone who did
wrong.The person should be punished, especially if the act done was done
intentionally so that justice is served and the person’s behavior is changed. If not, the
wrongdoer should be removed from society. In this case, Mulia Prihatin should
impose appropriate punishment and penalties upon him for his wrong act of
committing fraud. If his behavior is not changed, Mulia Prihatin should fire him and
employ another person.

c) According to Lawrence Kohlberg’s Cognitive Moral Development, cognitive refers to

reasoning and thinking. As individuals are not born with the ability to understand and
apply moral standards, the ability to make reasoned moral judgements are developed
in stages. Cognitive Moral Development has 3 levels and 6 stages.
The first level, which is the pre-conventional stage, comprises of Stage 1 and Stage
2. The first stage is punishment and obedience orientation. In this stage, obedience
to rules is backed by punishment. The person will either avoid punishment or harm to
self and regard to power. In this case, Zarul thinks that Puan Ya will not notice his
misconduct since he has access to the systems and docments to cover it and he also
has the trust of Puan Ya. Zarul is not afraid of the impact of punishment for his
misconduct. In order to prevent this from happening, Mulia Prihatin should impose
higher punishment and penalties in the regulations for any fraud committed by the
employees so that Zarul and other employees would be reluctant to commit fraud
again and become more obedient.

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The second stage is Instrumental relativist orientation. In this stage, a person is only
self-interest oriented. The person will only follow rules if the rules satisfy their
interests and needs. They have no regard for loyalty, gratitude and justice. In this
case, Zarul is not self-oriented. He misused the trust given to him by Puan Ya and
focused on himself to gain profit. He ignored the rules and regulations of the
company as he needed the money for his parents to fulfill his family’s needs. Zarul
could have found other ways to get more money if he was loyal to Puan Ya but he
chose to manipulate for his selfish reasons.

d) According to the freedom axiom as mentioned by Beekun, freedom is the freewill and
ability to act without external coercion within Allah’s creation as trustee on earth. This
means that people who have a contract has divine, social, political & business
obligations. The pig element introduced by al Ghazali is ash-Shahwa which means
lust or gluttony. In this case, the pig element has existed in Zarul as he was blinded
by his lust for money which led to him committing misconducts in the company.
Although Zarul has the freewill to do anything without coercion from others, he was in
a contract and has business obligations to his employer, Puan Ya. Therefore, he
should have resisted the pig nature and be honest in his work.

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Question 2
a) In this case, Majid, the senior accountant was concerned about the lack of time and
lack of readily information available that also contains error. Firstly, Cekap Enterprise
could ask for an extension of time due to lack of information and evidences for him to
audit the accounts for Suria Dana. If Suria Dana would not provide extra time, Cekap
Enterprise can ask for extra fees to cover for extra audit partners in the audit team so
that the audit can be done thoroughly. Doing the audit in a short period of time can
affect the firm’s integrity if Cekap Enterprise could not detect any issues from the
financial statements.
Secondly, Cekap Enterprise can withdraw from the engagement with Suria Dana as
this could lead to intimidation threat. Since the audit fees from Suria Dana is 30% of
the total fees, the amount is material and the auditor might be undue influence and
scared to lose the client. The client was also pressurizing Majid on giving a clean
opinion in order to receive funds and grants from the government. Majid was also
involved in a lot of services for Suria Dana and is scared of the implication of losing
this account to his audit firm. Therefore, Cekap Enterprise should withdraw from the
engagement to avoid unethical conduct.

b) Firstly, one of the possible consequences Majid and his team may face if they fail to
protect their rights in facing the above workplace conflicts is affect their integrity.
Most of the information needed from Suria Dana’s management was not readily
available and contained errors. Cekap Enterprise’s audit engagement team could not
get the evidence needed for testing in a timely manner as the company management
did not have the work completed. Majid and his team may have to audit the
statements quickly without performing the audit thoroughly. This will impact their
integrity as the statements can be materially false or misleading, is furnished reckless
or there might be information that is omitted or obscured by the management.
Secondly, this will also affect Majid and his team’s objectivity. As Suria Dana is one
of Cekap Enterprise’s biggest clients as it represents 30% of the firm’s total audit
fees and the management expected a clean opinion on the report from Cekap
Enterprise in order to receive funds and grants from the government, this might affect
Majid and his team will compromise their professional or business judgement
because of being undue influence.

c) First is integrity. A professional accountant should be straightforward and honest in

all professional and business relationships. In this case, Majid should be honest in
performing his fiduciary duties as an auditor by preparing financial statements and
not letting the pressure of the top management in Suria Dana to influence his
professional judgment. His misconducts may affect many users of the financial report
in making important decisions.
Second is objectivity. A professional accountant should not allow any bias, conflict of
interest or undue influence of others to override professional or business judgements.
The management of Suria Dana was firm in getting a clean opinion on their report
and this pressurized Majid as he was scared to lose his client. Majid, as professional
auditor should not allow any undue influence onto him which have override his
professional judgments. If he went through with Suria Dana’s requirement, it will
affect his objectivity as an accountant.

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Third is professional behavior. A professional accountant should comply with relevant

laws and regulations and should avoid any action that discredits the profession. If
Majid allows the financial reports to not be audited thoroughly and signed it as a
clean report, Majid will be violating the relevant accounting standards, regulations,
and laws and thus discredits his profession as an auditor. This act may stain the
profession’s name.

d) It is important for Majid as a professional auditor to exercise professional judgment

and not to compromise on the compliance to the fundamental principles of the Code
of Ethics in discharging his duties. In this case, Majid should only follow the client’s
requirements when it is within the laws and regulations. He must always aware he is
bound to comply with the required laws and regulations when dealing with his work.
He must try his best to conduct his work in the most ethical manner. At the same time
he must know how and when to put limits on pressure he faces to ensure he will not
be dragged into things he should not perform as an auditor.
Majid should perform his work with competence and due diligence and not commit
unethical conduct simply because of the pressures that he received from the client. It
is also important for Majid to know how and when is best for him to uphold his right
as a professional accountant. He should make sure he had done the audit thoroughly
and give correct opinion on the report He should also safeguard himself from
unethical threats while conducting his work.

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Question 3
a) Cumi Ciki could enhance the credibility of its corporate reporting through
sustainability disclosure by being more socially and environmentally responsible for
the strategic development of its organization. By having good relationships with local
authorities, it will make business easier. Cumi Ciki can cover on areas like
employee’s welfare such as staff training program, financial and non-financial
benefits, staff cooperatives and recruitment policies. They can also provide product
or service improvement or contribution such as information on product quality,
research and development, product safety and responsiveness to customer’s
complaints.

b) According to the Stakeholder’s Theory, each firm was created to serve more than
just its shareholders. Management should respond to the interest or claims of
stakeholders in a proper way as managers bear fiduciary relationship to stakeholders
as well as maximize shareholder’s wealth. For example, by contributing to the
welfare of the society and promoting a clean and healthy environment. In this case,
launching the water stewardship programme would maximize the stakeholders’
wealth by promoting sustainable development as a way to save resources. This will
spark the interest of public as well which will later maximize stakeholders’ wealth.

c) MCCG requires the board to establish an audit committee of at least 3 directors and
majority of independent non-executive directors and a chairman who is an
independent none executive director. One of their duties is to get involved with the
internal audit programme, evaluate quarterly result before approval of BOD and
report any related party transaction and conflict of interest situation within the group.
This can help to safeguard the firm against unethical conduct or possible fraud by the
board of directors.

d) They board of directors can emphasize on activities such as environmental protection

by replanting of trees, recycling of waste, handling and disposing toxic waste, no
plastic bag day, measures to protect the environment, water and noise and air
pollution. They can also create Community Involvement Activities such as donations,
sponsorship, adoption of wildlife animals. This can build the firm reputation again in
the eyes of the stakeholders.

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