MAF 680: INTEGRATED CASE STUDIES

“TO FIDDLE OR NOT TO FIDDLE"

Members:NURLIYANA SUKHAIMI 2011646984

NOOR HARTIEKAH ABDUL RAHMAN 2011698968

NUR SYAHIRA ABDUL RAHIM 2011884804

NUR SHA SHA MAT ROSLI 2011694646MOHD AMZAR MUHD KAMAL 2009522949

Overview of the case

YBLC Ltd

Foreign investment company in

ChinaPPLC Ltd.

Malaysian company

Set up a joint venture -1990s

Mr. Zhang

-Local chinese-The General Manager

-Malaysian chinese-The Financial controller-budgetary,accounting & reporting function

Mr. Lee

Mr. T

-Local chinese-The Economic Officer-in charge of foreign investment joint venture in Antumonitor & supervise

EO Lee meet GM Zhang

Asking to change the P&L position loss to profithave a good report

FC T was asked to meet GM Zhang

GM Zhang asking about altering the P&L

could not alterfollow IAS & IFRS stand on his finalised account

QUESTION 1 (YANA)

QUESTION 2

How would you PRIORITIZE the issues/problems in DECENDING order of important?

PRIORITIZE OF ISSUES

2) Lack of the understanding of Fiduciary Duties of Directors

3) Lack of understanding of Duty of Care by Director & Management

REASONS1) Mr. Lee as Economic Officer decision should be

benefit to the company as a whole.

I. However Mr. Lee make decision just to reward himself as he want good report card to get fast promoted.

II. Firstly prioritize as Mr. Lee always questioned by China Civil Services as why the all the company managed by him are not performing.

2) Mr. T as Financial Controller must be professional and complied with code of ethic.

III. As an accountant. Mr T can’t breach his fiduciary duties just to satisfied his top management (Mr. Lee) and (Mr. Zhang) by making slightly amendment on financial statement.

IV. Second prioritize, as Mr. T refused to commit the requirement as he is professional and stand on his own principle even though he is under pressure .

REASONS3) Lack of understanding of Duty of Care by

Director & ManagementI. Mr. Lee should comply with Director Duties according to

Company Acts 1965 II. However, if he breach the duties of director he might be

subjected to the removal by management.III. Third prioritize, because the amendment on Financial

Statement not yet occurred

4) Lack of Corporate GovernanceIV. Mr. Zhang should personally understand and practice the

good ethical conduct within organization.V. Four prioritize, because it is due to familiarity reason

which is beyond the managament control. Mr. Zhang is easily influenced by Mr.Lee because there are coming from same nation.

VI. Both of them should be more rational.

REASONS5) Lack of Corporate Culture

I. As an international joint venture business, company should understand and familiar with the accounting standard being practiced .

II. Last prioritize, as personnel in charged of international should comply with the accounting practices and not against the standard.

QUESTION 3

Suggest the practical strategies to overcome issue of problems.

RecommendationConflict of Interest & due care

Introduce policy and procedures for managing conflict of interest to be review every year.

Include in the policy sanctions for any breach of the policy and procedures.

Refer to conflicts of interest in all corporate documents such as codes of conduct.

Train all relevant employees in the policy and procedures to ensure they are aware of their accountabilities.

Different corporate cultures

Develop a strategic plan that’s understood and embraced by all levels of the organization.

Build a culture where everyone is part of the team

Company should be flexible to change

Introduce good communication systems within the company.

Recommendation

Lack of corporate governance

Introduce risk management & internal control in the company.

Establish audit committee Openness and

transparency Establish a remuneration

committee to make sure the level and composition of remuneration is sufficient and its relationship to performance is clear.

Lack of understanding of fiduciary duties of directors

Introduce rules & regulations inside the companies

Adopting a written ethics policy to guide directors and govern their behavior.