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To Fiddle or Not to Fiddle

CASE 4 (Role Play)

A financial controller in a Sino Malaysian joint venture was asked by a director representing the interest of the Chinese government , who was also a government official supervising foreign JV companies, to change the P&L position from loss to profit, so that he could paint a rosy picture in his report of JV performance under his charge.

This case introduces the scenario in which an accountant may face when he works in a foreign country in a joint venture. The dilemma can also faced by an accountant working in a family owned company in Malaysian, where decision is made by the ever powerful founder-owner.

The case also serves to illustrate the importance of corporate governance in the business world. Corporate governance encompasses achieving corporate mission or objective, law compliance, upholding code of best practices and adherence to business and personal ethics. The corporate governance could be the foundation of a better business world where fraud, malpractice, corruption could be minimised.

Objectives and Learning Outcomes

Relate the accounting training to date to explain the concept of true and fair view of financial statements. (Skill & attitude) Understand and appreciates that an accountant must comply with the Malaysian accounting standards (now Malaysian financial reporting standards). Also as an overseas subsidiary of a Malaysian company, there is the need to consolidate the YBLCs account into the parent (group) accounts. (Skill & attitude)

Appraise the importance of corporate governance in the business world, and be aware of the elements in corporate governance. (Skill & attitude) Defend the principle of separation of ownership and management in the administration of the company, and relate this to the directors fiduciary duty and duty of care owed to the company. (Skill & attitude) Justify that corporate governance as a cornerstone for prevention of fraud, malpractice and corruption. (Attitude)

Develop strategies to inculcate the concepts & importance of corporate governance among executives and professional in business. (Skill & attitude) Recognise the code of ethics and other trade best practices they have pledged to up hold. (Attitude) Be aware of the management problems that could be facing, and the need to be sensitive to issues, in cross cultural management in an international joint venture business. (Skill) Apply the principles of international taxation when working in different countries overseas. (Skill)

Case Leading Strategy

Students should familiarise themselves with:
Business law (basic principles of company law. law of contract, employment law etc) Financial reporting standards for Malaysia Principles of international taxation Tax avoidance vs. tax evasion Code of best practice for corporations Corporate governance Elements of business ethics Code of ethics for MIA members

Suggested Questions
Why is it wrong for the economic officer to make such a request? What are the consequences of giving in to the economic officer/s request? How would you ensure true and fair view of financial reporting? What are the Accounting standards a Malaysian accountant has to comply with? Those foreign accountants like to show an account making a loss, to avoid paying tax, alleged the Economic Officer. Can it be true? How and with what would you educate the directors and management staff of the company?

Assessment of Presentation
Script writing & organizations (30 marks)
Scene setting (30 marks)

No solution to the issue raised

Slight solution presented

Appropriate solution presented

All issues raised and complete solution presented
Outstanding scene setting

No prop at all

Some/ minimum prop prepared/ provided

Appropriate scene setting

Role character (40 marks)

Role character wrongly assigned

Role character is presented fairly

Appropriate role Excellent role character is character observed assigned and outstanding