Multimedia University – Faculty of Business and Law Practical Training Report
Abstract
First of all, so thankful and appreciates to the Faculty of Business and Law,
Multimedia University had endeavored for us the opportunity to further our skills in the
industrial training section 2006/2007.
Undoubtedly, I had gained some basics of working experience as well as social
skills during my recent training life. Before I stepped into the industry, fear and excited
emotion was just unavoidable. But once I stepped into the company, my goodness, I had
totally no time to scare or whatever. This was because the beginning of my training life
was extremely busy. That time was the peak period of tax submission for personal and
sole proprietors.
I was engaged in auditing, personal and company taxation and accounting as well
during my training period. Secretarial works was lesser than the three mentioned above.
At the beginning of training period, I was engaged mostly in taxation for personal and
sole proprietors. It was the first time to fill in Form B, it was just excited. By the way, I
had to be very careful while filing the Form. After the death line for tax submission for
personal and sole proprietors, it was the time to engage in auditing works. The audit
procedure included reviewing the company’s system of bookkeeping, accounting and
internal control, making such tests and enquires as they consider necessary for the
purpose of their audit, for instance, these tests will apply to the verification of assets and
liabilities. The audit work must be carrying with cautious. Any fraud or careless will
cause the final audit report void.
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Multimedia University – Faculty of Business and Law Practical Training Report
After the six months of practical training, I get to realize the meaning of
“knowledge began of practice”. It was the most memorable period of my life.
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Multimedia University – Faculty of Business and Law Practical Training Report
Introduction
Multimedia University (MMU) is my dream university since I get to know its
existence. It is the first Government-approved private university in Malaysia. It plays an
important role in providing world class education within the abroad sphere of
telecommunications, multimedia, computers, digital art, animation, information
technology, software development, and management.
For accounting major in MMU, the syllabus is broad and complete. At the mean
time, besides our core subjects, we have to study as well as marketing, finance, business
information, information technology and a few to name. Accounting major in MMU is
recognized as professional by MIA (Malaysian Institute of Accountant) and as well as
industry.
Since our qualification is recognized by MIA, we have to undergo 26 weeks of
practical training in terms to complete our syllabus. By the way, we have to apply an
audit firm which recognized by MIA or accounting department of commercial and
government agencies which supervised by MIA.
I have been applied as a trainee in Foo & Company which located at 15-1A,
Jalan Kesidang 3/11, Melaka Mall, 75300 Melaka. Foo & Company was set up in the
year 1998. Foo & Management Consultancy and Foo & Co Tax Services was set up
after Foo & Company. Foo & Company is the audit department that provides
professional audit services to clients. Foo & Management Consultancy is the accounting
and secretarial departments. Meanwhile, Foo & Co Tax Services is the tax department
that provides taxation services.
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Multimedia University – Faculty of Business and Law Practical Training Report
The firm currently provides auditing, accounting, secretarial and taxation
services to more than 300 companies including private limited and limited company.
Their business in nature included trading, property and development, education,
manufacturing and many mores.
My practical training was started from 19th September 2006 to 15th December
2006. My scope of training in Foo & Company included auditing, taxation, accounting,
bookkeeping, and secretarial. I was under the supervision of Mr. Lim Ban Chow during
the sixth months training.
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Multimedia University – Faculty of Business and Law Practical Training Report
ORGANIZATION CHART OF FOO & COMPANY
Diagram 1: Organization Chart
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PrincipleFoo Kok Lim
SupervisorLim Ban Chow
SupervisorLim Ban Chow
SupervisorFoo Seow Chin
Foo & Co. Foo & Co. Tax Services
Foo Mgt.Consultancy
AdministratorChu Hun Lian Trainees
Sharon LeeSe Sian HooTee Ee Voon
Senior StaffHairulnizam
(Jasin Branch)
Multimedia University – Faculty of Business and Law Practical Training Report
Full Report
Taxation works and accounting works
My practical training was started on 19th June 2006. I reached office punctually
during the first day of my training. The works assigned to me during the beginning of
training was taxation works. I was required to compute the partnership account and tax
payable of YSL Industrial & Supply Enterprise from year 2002 to 2004. This was a
difficult task for me since the partnership situation for YSL was quite complicated. After
finishing prepared the profit & loss accounts and balance sheets, I passed my work to the
senior colleague to proceed with tax computation.
In general, workloads in Foo & Company were heavy from the beginning until
the end of my practical training. During the first month of practical training, my overall
scopes of works were covered by taxation. From taxation for partnership, sole
proprietors to personal, I had to prepare the balance sheet, profit & loss account, notes to
the accounts, capital allowances, and finally the tax computation. After the tax
computation, I was required to fill in the Form B by referring to the above accounts. I
will pass my work to the senior colleague for examination each time a task was
completed. Besides taxation work, I was started to enter monthly accounting transactions
for Milik Sinar Sdn. Bhd. (kindergarten) by using UBS accounting system. Fortunately I
used to learn UBS system before in our course syllabus, I just recalled what I have learnt
and applied it into my work. Year end processing, bank reconciliation all can be done by
using UBS accounting system. It is easier and save our precious time by using UBS
accounting system.
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Multimedia University – Faculty of Business and Law Practical Training Report
Auditing works
I was started auditing works during my third week of industrial training. At the
beginning I was in charged to carry out dormant company audit. I was given previous
year audit report, working paper and relevant documents. I had to read all these previous
documents before start to audit. Hence, I understand how the documents and audit
working papers are organized and kept through these activities. Normally, for each
client, there are three types of files to keep the relevant documents and working papers.
There are permanent audit file, current audit file and taxation file. The permanent audit
file is used to keep the audit reports, sales and purchase agreement, tenancy agreement,
bank facility agreement and Memorandum and Article of Association. Current audit file
contains all the audit working papers that have been done for the previous year. The
copy of audited financial statement, tax return forms, tax computations, and worksheets
will be kept in taxation file. All these files are kept properly in pre-numbered pigeon hall
to be retrieved easily once needed.
The Process of Providing Audit and Tax Services to Clients
The audit services starts when the documents have been received from clients.
For instance, we would receive management accounts such as balance sheet, profit and
loss, and trial balance. Besides management accounts, general ledgers, payment
vouchers, bank statements, official receipts, invoices and sort of documents will be
receive together with management accounts for audit purpose. Once the above
documents received, the first thing we need to do is to acknowledge the documents by
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Multimedia University – Faculty of Business and Law Practical Training Report
listed out and keep the documents in appropriate place. The acknowledgement of
documents with a list will be given to supervisor to assign audit works to staff. When the
staff receives the acknowledgement of documents from supervisor, all the relevant
documents to perform an audit have to retrieve.
Before performing an audit, we need to check closing balances of the balance
sheet items from last year working papers. After that compare to the opening balances of
balance sheet items in client’s general ledger. This step is necessary to ensure that clients
have made adjustments to their accounts based on previous year audit adjustments done
by audit staff. After that, we can start to perform all necessary audit procedures in order
to draw a conclusion on the true and fair view of the financial statements prepared by
clients. If we are appointed by client to be the tax agent of that particular company, we
have to prepare tax computations together with worksheets after all the audit procedures
completed.
Next, audit staff will prepare confirmation letter, letter of representation and draft
audited financial report. After that, audit staff will finalize all the working papers and
double checking the typing errors of drafted financial report. The drafted report together
with all the relevant documents will pass to supervisor for review. Audit staff needs to
clear review points, if there are any inquiries asked by the supervisor after reviewing all
the working papers. The final audited financial statements will be printed out after
supervisor have ensured and conformed that there are free of misstatements and errors
on the drafted report. All copies of financial reports must be signed by directors before
the signature by auditor. Therefore, tax return forms and worksheets can be filled up
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Multimedia University – Faculty of Business and Law Practical Training Report
based on the audited financial report. After the tax return forms signed by tax agent and
director of the company, it will be submit to Inland Revenue Board (IRB). After audit
and taxation services completed, the completeness of client’s documents have to double
check before it returned back to client.
Auditing of Dormant Company
During the third week of training, I have been assigned to perform audit on
dormant companies. Dormant companies refer to those companies which never
commence business since the date of incorporation or those companies which have
ceased their business. Hence, the process of auditing of dormant company is less
complicated as compare to auditing an active company because some of audit
procedures like audit of trade receivable and inventories are not applicable on that basis.
Therefore, performing audit on dormant company enable us to understand the basic audit
procedures for auditing a company.
a) Auditing of Income Statement Items
Normally there is no income generated by dormant company since there is no
activity based on generating income. As such, audit procedures for auditing revenue or
turnover are not applicable. However, some of the expenses like audit and secretarial
fees cannot be avoided even though the company does not have any operations during
the financial year. For dormant company, usually there is no trial balance prepared by
client for the purpose of audit. Therefore, before we start audit, we have to prepare
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Multimedia University – Faculty of Business and Law Practical Training Report
journal entries to take up audit and secretarial fees for current year based on debtor
records provided by audit firm and secretarial firm. For example, the journal entries to
take up the current year audit fees are debit audit fee account and credit accruals
account.
For a newly incorporated company, preliminary expenses are unavoidable. These
expenses are normally charged by secretarial firm for providing services on the
formation of a new company. Usually, the formation expenses for newly incorporated
company are around RM 2000. Since there are only a few types of expenses and amount
of each type of expenses incurred was not material, therefore, the audit procedure for
auditing expenses is to check for correct classification of expenses. Other audit
procedures like test wages or salaries to underlying records would not be applicable.
b) Auditing of Balance Sheet Items
The most common balance sheet items that occurred in the balance sheet of
dormant company are accruals, amount owing to directors, share capital and
accumulated loss accounts.
The accruals account usually consists of audit fees and secretarial fees that have
not been paid after the services have been provided. On the other hand, amount owing to
directors resulting from payment made by directors on behalf of the company. In
auditing of accruals account, the audit procedure such as check for possible omissions
are performed by checking service invoice after the year end and inquire whether such
services already provided before year end. In terms of amount owing to directors, we
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Multimedia University – Faculty of Business and Law Practical Training Report
need to check the movement of balances during the year for ensuring any increase is
actual liabilities. Thereafter, we need to obtain confirmation for that balances.
For a company to be incorporate, the paid- up share capital must have at least
RM2. In auditing of share capital, we need to check statutory records whether there is
any increase in both authorized and paid up share capital.
Auditing of Investment Holding Company and Active Company
After finished audited few dormant companies, I was assigned to carry out few
active companies audit. These included manufacturing, trading, and service providing
companies.
a) Auditing of Income Statement Items
i) Revenue or Turnover
Revenue or turnover for companies may include sales income, service income,
rental income, management fees and other types of income depend on the activities of
the particular companies. Before the exact audit perform start, all the invoices and
vouchers sent by clients will be vouch by one of the staff. After all the vouchers and
invoices finished vouched, another staff who in charge in audit will start to prepare the
audit works. These can be classified as sales cut off test and sales test. The purpose of
doing sales cut off test is to ensure the sales recorded in general ledger was incurred
within the accounting period. Normally, the last five sales invoices for the particular
accounting period and the first five sales invoices after that particular accounting period
will be found out. After that, we will check general ledger to make sure the last five
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Multimedia University – Faculty of Business and Law Practical Training Report
sales invoices for the particular accounting period have been recorded in ledger and the
first five sales invoices after that particular accounting period are omitted from ledger. In
terms of sales test, first of all we need to randomly select few months’ sales depend on
sales volume of that company. If the volume of sales of that company is small, normally
two months’ sales will be selected. However, if the volume of sales is large, normally
three or four months’ sales will be selected for doing sales test. The next step is to trace
from sale invoices to the general ledger for checking possible errors on invoice date,
amount, and pre-numbered sequence and trace from general ledger to sales invoice for
test of omission. In addition, we need to trace material amount in general ledger to
individual debtor account for checking whether the sales have been correctly posted to
individual debtor account. Moreover, a sample of credit notes to sales return is needed to
be checked and make sure credit note have been properly authorized. After the sales test
have been done, we are able to draw a conclusion on the reliability of accounting system
for recording sales transactions based on the sample of sales that we have tested.
Rental income is normally generated by letting out the property held by
company. For rental income, we need to check the tenancy agreement to ensure all
income was correctly taken up during the financial year. If the rental income received is
not tally with rental income prescribed in the tenancy agreement, there may be a rental
receivable or an advanced receipt of rental. Therefore, relevant adjustment must be done
to ensure rental income show in income statement is tally with amount prescribed in
tenancy agreement.
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Multimedia University – Faculty of Business and Law Practical Training Report
Interest income is usually generated from the fixed deposits put in bank. In case
of interest income, we need to check fixed deposit balances and maturity dates to ensure
all interest income was correctly taken up. During course of audit, if there are fixed
deposits appear in balance sheet but no interest income shown in income statement
prepared by client, there must be the omission of interest income. Therefore, we have to
take up interest income according to the interest rate and maturity date stated on the
fixed deposit slip issued by bank.
After the audit procedures for auditing revenue have been done, we need to draw
a conclusion on whether the revenue has been fairly stated in the financial statements.
ii) Purchases and Expenses
Purchases test are needed to be performed in order to audit purchases. The
objective of performing purchases test is to determine whether accounting system of
client was reliable in recording purchase transactions and individual trade creditor
accounts. Like the sales test, we also select two or three months purchases as sample for
performing purchases test. Next, we trace from purchase invoice to general ledger for
checking the possible errors on invoice date and amount. Furthermore, we also trace
from general ledger to purchase invoice for test of omission. Besides, we need to trace
material amount in general ledger to individual creditor account for checking whether
purchases have been posted correctly to individual account.
Besides purchases, companies would incur different types of expenses in the
course of running business. In auditing of expenses of companies, analysis of expenses
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Multimedia University – Faculty of Business and Law Practical Training Report
will be performed to check whether expenses were correctly taken up. This activity is
done by selecting the expenses accounts which amount is considered to be material and
vouched those expenses to invoice or other supporting documents of expenses for
checking correct classification of account. Repair and renewals expenses on capital
items are always needed to be analyzed because some of the material expenses are
capital in nature. As such we need to capitalize those expenses which are capital in
nature as fixed assets and provide depreciation charge accordingly. Examples for
expenses which are capital in nature include renovation for building, electrical
installation, replacing new machine. For tax purposes, analysis of expenses would help
to detect expenses which are not deductible against business income. Therefore,
expenses like traveling, rental, commission, entertainment, advertisement are always
needed to be checked whether any private expenses are contained in those expenses. For
rental expenses, monthly rental, name of landlord and address of property rented must be
stated in working papers.
b) Auditing of Balance Sheet Items
i) Auditing of Current Assets
Besides non-current assets, we have to audit current assets like inventories for
most of the trading and manufacturing. Stock take would be carried out to review count
procedure planned by client and determine whether the procedures provided adequate
steps to avoid miscounting. Furthermore, we should test count items from stock sheets to
physical stocks and vice versa to ensure counting and recording are reliable cum
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Multimedia University – Faculty of Business and Law Practical Training Report
accurate. In addition, test check casting and extension would be done in order to check
arithmetic accuracy. Besides, stock sheet checking is done to ensure that the value of
stocks is not amended after physical count has been done. We need to note any
damaged, obsolete, and slow moving items and obtain opinion from directors whether
such items needed to be written-off. Moreover, cut-off test should to be carried out. We
have to check last few goods receipt notes to purchase invoices, if goods are received
and purchase invoices are recorded after the year end, an adjustment must be made on
trade creditors. Also, we need to check the last few consignment notes to sales invoices,
if goods were delivered but invoices was recorded after the year end, adjustments should
be made to sales or inventories. Test check to purchase invoices is needed to be
performed for ensure whether costs stated in the stock sheet are reliable. Finally, we
would perform test check to sales invoice to establish net realizable value, and inventory
should be stated at the lower of cost and net realizable value.
For debtors and prepayments, several procedures should be performed in order to
ensure the existence of debtors and prepayments. In terms of trade debtors, control
account should be reviewed or prepared for checking whether the balance in trade
debtors control account agree to total of debtors list. Next, we proceed to check the list
of trade debtors for ensuring each debtor are made up of specific balance and there are
no debtors listed without name. When the number of debtors is small, we are able to
check receipts after year end to verify whether the debts are good. If most of the debtors
paid after the year end, no further audit works are needed to be done. For the debtors
who have credit balances, we should check whether there are any book keeping errors
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Multimedia University – Faculty of Business and Law Practical Training Report
(receipts have been posted to wrong debtors account) and cut-off errors (invoices not yet
issued but payment have been received). If these errors occurred, then adjustment on
debtors account should be made. In terms of prepayments, we need to check if the
prepayments are normal to the company operation. Furthermore, prepayment without
movement should be checked for reasonableness. For example, it is reasonable for no
movement on deposits for rental and electricity.
During the course of audit, several audit procedures on bank and cash balances
need to be done to ensure these balances were fairly stated in financial statement. For
bank balances, normally we need to obtain bank statements to verify the balances in
client’s general ledger. If there is any term loan or overdraft facility, bank confirmation
should be obtained because it reveals information such as the nature of securities
pledged to the bank and limit of borrowing that are necessary for disclosure in financial
statement. In addition, bank reconciliation must be reviewed or prepared in order to
agree book balances to bank confirmation. Any error or omission other than outstanding
cheques and uncredited lodgements in bank reconciliation would be subject to
adjustment. Furthermore, we need to check clearance of cheque and any uncleared item
after the balance sheet date to determine whether reclassifications to debtors and
creditors are necessary. For cash balances, cash count should be done if the amount of
cash balance is large. We need to ensure that physical cash balance is equal to book
balance because sometimes omission such as petty cash payment have been made but
not recorded in cash book. In case cash count is not carried out, cash certificate should
be obtained from clients.
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Multimedia University – Faculty of Business and Law Practical Training Report
i i ) Audit of Non-current Assets
There are many types of non-current assets for a company. There includes
freehold land or building, office equipment, furniture and fitting, plant and machinery,
and investment. In order to carry out audit work for non-current assets, firstly, we need
to obtain fixed assets register and prepare movement schedule which would show any
addition and disposal of assets during the financial year. In case there are any material
additions, we need to vouch those additions to ensure cost was correctly taken up with
correct classification. Therefore, the invoices would belong to company. Furthermore,
physical verification would be also considered if the value of plant and equipment and
addition during the year are material. In addition, we need to review repair and renewals
expenses for any capital items. Before capitalizing the expenses, we have to consider the
materiality. For any disposal of assets, we need to vouch sales proceeds to cash book or
bank statement. In addition, we need to check gain or loss on disposal of assets and
therefore prepare a schedule for fixed assets disposal. Moreover, adequacies of
depreciation charge for assets have to be reviewed as well. Depreciation charge reflects
the useful life of the assets and it is consistent from year to year for the particular asset.
Lastly, inquire the company’s director is there any need for impairment or revaluation of
assets for the particular financial year. If there was any impairment or revaluation of
assets, schedule must be prepared to ensure future reversal of impairment was treated
treated.
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Multimedia University – Faculty of Business and Law Practical Training Report
iii) Auditing of Current Liabilities
The objectives of performing audit procedures on creditors and accruals are to
ensure creditors were not understated and probable liability was provided for. In terms
of trade creditors, we should review the trade creditors control account to ensure the
balance in control account is tally with total list of creditors. Any difference between the
balance in control account and total list of creditors may indicate omission of records.
Besides, list of trade creditors need to be reviewed to ensure that each creditor
was made up of specific balances. When we trace from list of creditors to supplier
statement, difference may occur due to over or under statement of liabilities, as such we
should investigate the difference and make adjustment if the differences are material.
For creditors who have debit balance, we should check whether there are book keeping
errors and cut-off errors. Debit balances which arise due to advance payments made may
need to be reclassified to debtors if the amount is material. In addition, we should check
for possible omission of trade payable. For example, names of creditors appearing in last
year’s list and not in this year’s list may indicate possible omissions.
For accruals such as accrued salaries, rental and telephone charges, we should
check possible omissions if those accruals are considered material. Possible omissions of
accruals can be detected by checking service invoice after the year end and determine
whether such services already provided before year end. For accrual without movement,
we can obtain directors’ opinion for need to written off those accruals.
In terms of other creditors such as amount owing to directors and amount owing
to holding company, we need to seek confirmation from related parties and loan
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Multimedia University – Faculty of Business and Law Practical Training Report
creditors. Besides, we need to check movement of balances of other creditors to ensure
any increase is actual liabilities.
For companies acquire assets through hire purchase, there would be hire
purchase creditors. As such we should obtain hire purchase agreement to ensure that
agreements are in the name of company. Furthermore, prepare a standard schedule on
balances and interest charge on hire purchases. For any new hire purchase, we need to
ensure amount capitalized in financial statement was correct. Normally, amount
capitalized should exclude interest charge, road tax and insurance for motor vehicles.
The estimate of fair value of hire-purchases should be obtained from the director.
iv) Auditing of Share Capital
In auditing share capital, any increase in share capital must be referring to
statutory records for any resolution approving increase in share capital. Increase in share
capital is only finalized when Form 24 (Return of allotment of shares) has been filed
with ROC and share certificates have been issued. However, in cases of authorized share
capital, Form 28 (Notice of Increase in share capital) must be filed and Memorandum
and Articles of Association must be amended accordingly. The proceeds resulting from
increase of share capital can be in the form of cash or non-cash item such as asset
injected to company. Therefore, we need to ensure that the proceeds from share issued
are agreed to cash book or assets introduced.
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Multimedia University – Faculty of Business and Law Practical Training Report
Statutory Records Audit
The objective of statutory records audit is to ensure that the company’s statutory
books are recorded and kept properly in accordance with Company Act 1956. Statutory
books include register of members, register of directors, managers and secretaries,
register of debenture holders, register of directors’ shareholding, debentures and interest,
register of charges, and minutes book. Several procedures are performed on statutory
records audit before we can conclude that the company keeps all the statutory records in
accordance with law.
Companies are required to lodge with Registrar of Companies (ROC) an annual
return together with audited accounts within one month after date of Annual General
Meetings (AGM). Normally, AGM is held once every calendar year within 15 months
from the date of preceding AGM. However, newly incorporated company is allowed to
hold first AGM within 18 months from the date of incorporation. For audit purposes, we
will obtain the latest copy of annual return and inspect the filing receipts of annual
return.
Next, we will proceed to check statutory books for ensuring all information and
details recorded are up to date. In register of members, the particulars include names and
addresses of members, number of share held by members, amount paid on shares date at
which the person register as member and sort of. For register of members, we need to
check share issued at date of last annual return agree with latest annual return provided
that the company did not issue any new share. If there was any transfer of shares
between members, we need to check share issued and transfers since the date of last
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Multimedia University – Faculty of Business and Law Practical Training Report
annual return are properly recorded. Furthermore, a copy of Form 32A (Form of
Transfer of Securities) and resolution should be obtained in order to prove the process of
transfer of shares is complied with law. For the company which issued new shares, we
need to ensure Form 24 (Return of Allotment of Shares) is filed and check minutes and
resolutions for approval to issue new shares. Lastly, we must check to ensure the number
of shares in issue agree to paid-up share capital.
In register of charge, there must be a short description of property charged, the
amount of the charge, and names of the persons entitled to the charge. If there was no
any creation of new charges or discharge of charges, the particulars of charges at date of
last annual return must agree to latest annual return. We need to check Form 40
(Registration of charge) and resolutions if there was creation of new charges. In cases of
discharge of charges, we need to ensure Form 41 (Satisfaction of charge) has been filed
to ROC.
The register of directors, managers and secretaries shall specify their present full
name, Identity card number, residential address, date of birth, business occupation and
date of appointment, removal, and resignation. First, we have to check particulars of
directors, managers, secretaries as at date of last annual return agree with latest annual
return if there was no appointment or resignation of directors, managers and secretaries.
For appointment and resignation of directors, managers, and secretaries, we need to
check if the register books have been updated since the date of last annual return.
Furthermore, we have to check Form 48A (Statutory Declaration before appointment as
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Multimedia University – Faculty of Business and Law Practical Training Report
a director) for appointment of directors. Lastly, we need to check resolutions regarding
the appointment and resignation of directors, managers and secretaries.
A company must keep a register of directors’ shareholding showing the
particulars of directors’ shares in the company or in related corporation. Normally, we
have to check to ensure the changes in directors’ shareholdings are properly recorded. If
there were no any changes relating to the directors’ shareholding, we need to ensure that
directors’ shareholding as at date of last annual return agree with the latest annual return.
Besides register books, a company must also keep all minutes of proceedings at
general meetings, board meetings and management meetings in minutes books within 14
days of the meetings. For audit purposes, we need to check resolutions kept in minutes
book for significant or material item which need to be reported in directors’ report or
financial statement. Furthermore, it is important for us to examine resolutions
subsequent to the balance sheet for any subsequent events that will affect fair
presentation of the current period financial statement. For subsequence events that have
direct effect on current period financial statement, adjustments to financial statements
are required. However, if the subsequent events have indirect effect on financial
statement, only disclosure in financial statements would be required.
During the course of statutory records audit, I was exposed to different statutory
requirements that need to be complied by companies registered under ROC. Hence,
performing statutory records audit can provide us a better understanding about the
company secretarial practice in Malaysia.
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Multimedia University – Faculty of Business and Law Practical Training Report
Draft Audited Financial Statement Report
Once accumulation of final evidence and evaluated results of audit completed,
audited financial statements will be draft. The audited financial statements should
consist directors’ report, statement by directors, statutory declaration, report of the
independent auditors and financial statements.
Information contained in directors’ report include principal activities of
company, financial results of company, name of directors who held office during the
period, directors’ benefits, directors’ interests in shares and debentures, dividend
declared or paid during the year, issue of share and share option, statutory information
on the financial statement. In statement by directors and statutory declaration, directors
will state their opinion on the true and fair view of the state of affair of the company, and
declare that they are responsible to the financial management of company.
Report of independent auditor would be issued at the end of audit process. In
audit report, auditors will state that the opinion on whether the financial statements have
been prepared in accordance with approved financial reporting standards and whether
the financial statements give a true and fair view of state of affair of company.
Normally, standard unqualified audit report will be issued if auditors are able to
conclude that the financial statements give a true and fair view and are prepared in
accordance with approved financial reporting standards. Sometimes, auditors would
issue unqualified audit report with explanatory paragraph when the financial statement
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Multimedia University – Faculty of Business and Law Practical Training Report
present true and fair view but auditor believe that it is important or required to provide
additional information. In the cases that auditor are able to conclude that financial
statement present a true and fair view but the scope of the audit has been materially
restricted or the approved financial reporting standards were not followed in preparing
financial statements, qualified audit report would be issued. Adverse or disclaimer
opinion would be formed by auditors when financial statements do not present a true and
fair view or auditors are not able to form opinion on whether financial statements
present a true and fair view.
MASB 1 “Presentation of Financial Statement” requires companies to prepare
balance sheet, income statement, statement of change in equity, and cash flow statement
together with notes to financial statements. Notes to financial statements normally
contain accounting policies used for preparing financial statement, and important notes
to explain items in balance sheet and income statement. In balance sheet, items are
normally presented in non-current and current position. Property, plant and equipment
and investments are classified as non-current assets in balance sheet. The accounting
policies for property, plant and equipment, and investment are required to be disclosed
in note to financial statements. For property, plant, and equipment, the accounting
policies stated include the measurement bases of value, depreciation method, and useful
life or depreciate rate. The accompanying notes for property, plant and equipment would
provided the reconciliation of carrying amount at beginning and end of the period for
each type of fixed assets. In addition, Companies are required to disclose separately the
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Multimedia University – Faculty of Business and Law Practical Training Report
carrying amount of freehold land and building. Furthermore, a note to clarify assets
which have been pledged as securities should be disclosed.
Current assets in balance sheet include inventories, trade receivables and bank
and cash balances, deposit and prepayment. For inventories, the accounting policies in
relation to measurement of inventories (cost or net realizable value) and cost formula
(FIFO, LIFO, and Weighted Average) are disclosed in financial. In the accompanying
notes, inventories are sub-classified into raw material, work-in-progress and finished
goods. In addition, the amount of any inventory pledged as securities for borrowing
should also be disclosed in financial statements. In terms of trade receivables, the
accounting policies regarding basis of measurement and recognition as well as basis for
write off of bad debts are disclosed. Normally, receivable are stated in anticipated
realizable value, and bad debt are written off when identified. The accompanying note
for trade receivable would show the carrying amount after deduction of doubtful debt
and also state the credit terms for trade receivable. For bank and cash balances, the
accounting policies about what comprises cash and cash equivalent in cash flow
statement are shown in note to financial statement. The accompanying note would
segregate fixed deposit from bank and cash balance. Besides, the average interest and
average maturity period of fixed deposits and amount of fixed deposit pledged as
security also need to be disclosed in notes to financial statements.
Current liabilities in balance sheet include trade payable, advance receipt, hire-
purchase payables, interest bearing borrowings and tax payable. In terms of trade
creditors, the accompanying note to financial statements would show the current
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Multimedia University – Faculty of Business and Law Practical Training Report
exposure profile and credit term of trade creditors. For hire-purchases payables, note to
financial statements would disclose current and non-current portion as well as the
average effective interest rate of hire-purchases payables. The non-current portion of
hire- purchase payable would be shown under non-current liabilities. In case of interest
bearing borrowings, the accounting policies stated include basis of measurement and
recognition. The accompanying note for interest bearing borrowings would show
separately the bank overdraft, trade facilities and term loans. For term loans, rate of
interest, nature of security and repayment term should be disclosed. Furthermore,
interest bearing borrowings are divided into current and non-current portion, and non-
current portion would be shown under non-current liabilities.
Capital and reserve in balance sheet include share capital and retained profits.
For share capital, authorized share capital and nominal value of various classes of share
are disclosed in notes to financial statements. In addition, issued and paid-up share
capital together with nominal value also needs to be disclosed. Furthermore, disclosure
of balances at beginning and end of period are also required if there are any increase in
share capital.
The income statement of companies would give a picture on the company’s
financial results. This statement was prepared by deducting all expenses from the total
income. Gross profit would arrive by deducting the cost of good sold from revenue. In
note to financial statement, accounting policies on revenue recognition should be
disclosed. In addition, if there is more than one significant category of revenue, amount
for each category should be disclosed in notes to financial statements. Furthermore,
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Multimedia University – Faculty of Business and Law Practical Training Report
disclosure of cost for each category of revenue is needed if revenue has been classified
into different categories. Other operating income would be added to gross profit and
administration expenses as well as other operating expenses are deducted from gross
profit in arriving profit from operation. In notes to financial statements, what income
makes up of other operating income would be disclosed. Moreover, items that have been
charged or credited in arriving at profit from operation are also needed to be disclosed in
notes to financial statement. Finance costs would then be deducted from profit from
operation in arriving profit before tax. If the finance costs is different to amount charged
under finance cost, a reconciliation of total finance costs are required to be disclosed in
notes to financial statements. After that, tax expense would be deducted from profit
before tax in arriving net profit for the year. In notes to financial statements, components
of tax expense may include current tax expenses, amount of deferred tax expense
relating to the origination and reversal of temporary differences. In addition, a numerical
reconciliation between tax expenses and the product of accounting profit multiplied by
the applicable tax rate would be disclosed to explain the relationship between tax
expense and profit before tax.
Statement of changes in equity in financial statements would show reconciliation
on the total equity at the beginning of period and end of period. Increase on paid-up
share capital, net profit or loss for the year and dividend declared will cause the
movement on the total equity.
MASB 5 “Cash Flow Statement” requires companies to prepare and present cash
flow statement in the financial statements. Cash flow statement will disclose the inflow
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Multimedia University – Faculty of Business and Law Practical Training Report
and outflow of cash and cash equivalents of a company from its operating, investing,
and financing activity. Cash flows from operating activities normally include cash
receipts from customers, cash paid to suppliers and employees, interest paid as well as
income tax paid. Cash flows from investing activities are those cash flows in relation to
acquisition and disposal of long term assets such as plant and equipment, and investment
in quoted share. The cash flows from financing activities includes those cash flows
relating to obtaining and repaying of financial resources from owners and other
providers of long-term capital.
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Multimedia University – Faculty of Business and Law Practical Training Report
Presentation of work done
Audit works
Anglo Treasure Sdn. Bhd. Dormant company.Honiwell Enterprise Sdn. Bhd. Dormant company.Soon Hock Electrical Engineering Works Sdn. Bhd.
Dealing in electrical engineering works.
Woon Hoe Kan & Sons Sdn. Bhd. Dormant company.Semarak Hardware Trading Sdn. Bhd. Dealing in hardwares trading business.Bee Heng Chan (Malacca) Sdn. Bhd. Dealing in furniture business.Shin Lek Steel Sdn. Bhd. Dealing in steel business. Uprima Sdn. Bhd Dormant company.Lambang Cekap Cleaning Services Sdn. Bhd.
Rendered cleaning services to customers.
British Domain Sdn. Bhd Dealing in management works.Milik Sinar Sdn. Bhd Provides preschool education.Pelangi Cempaka Sdn. Bhd. Dormant company.Gemilang Ritma Sdn. Bhd. Dormant company.Pay Fong High School, Malacca. Provides secondary education.Chin & Yau Advocates And Solicitors. Rendered legal consultancy services.
Table 1.1: Presentation of work done
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Multimedia University – Faculty of Business and Law Practical Training Report
Discussion on Findings and Results
Really appreciated to MMU that delivered us the opportunity to carry out these
sixth months practical training. It was a sweet and sour memory in my lifetime. All this
while I have been learnt to be independent and more understand what exactly
“trustworthy” meant. Beside internal works like auditing, taxation, accounting and
secretarial, interactions with clients is essential. In order to retain clients, despite of
professional knowledge, at the mean time we have to prove that we are effective and
efficient.
In this new era of technology, accountants have to enhance themselves in order
to compete with others. Besides accountancy knowledge, we should possess knowledge
of finance, economics, marketing, information technology, business strategies, current
issues and a few to name. Today, accountant is no more only accountant, an accountant
can be the financial planner, financial consultant, financial controller, auditor, tax agent,
CEO, CFO and so on. The works of accountants was not limited as last time, it is broad
than enough nowadays.
Nevertheless, we have to meet our clients almost daily. The public relations
skills do important for an accountant. In order to present our work perfectly, we have to
learn the presentation skills from time to time. To be a professional, tension and high
pressure is inevitable, especially auditors. Pressures imposed from the upper level,
clients, and environment. There are many ways for us to release tension; just we need to
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Multimedia University – Faculty of Business and Law Practical Training Report
find space time to figure it out. Frankly, accountants sometimes have to be a high EQ
person.
Time is precious to every accountant, auditor and tax agent. Report or work done
must be send to clients or other bodies on time. We have to be punctual as our promised.
Late submit of documents will arise problems such as penalty imposed to clients. As a
result, we have to take cautious from time to time.
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Multimedia University – Faculty of Business and Law Practical Training Report
Conclusion and Recommendations
Throughout these sixth months of industrial training in Foo & Company, I really
grown up and gained dozens of knowledge. I was so thankful to Mr. Foo Kok Lim, the
director of this company. He gave me the chance to complete my industrial training in
Foo & Company. Besides, I would like to say thankful to my supervisor’s guidance
during these sixth months period. He has enlightened me always on my assignments
indeed.
The most honorable and great thing I had done in year 2006 was completed sixth
months of industrial training. The workloads were extremely heavy during this period. I
tried my best to adapt the working environment as I never touch before. I still remember
when the last day of my training, such complicated was my emotion. Tiredness,
sentimental was my feelings for that moment.
I would say that it is vital for accounting students to conduct industrial training.
The benefits were a lot, the most meaningful and valuable point is practical training
really an advantage to us and it really helps us a lot to face the future challenges. “All
genuine knowledge originates in direct experience”. This sentence reflects and
represents the conclusion of my practical training.
Although the journey to be a professional and qualifier is arduous, I will still
walk until the end of the road because I convinced with myself that this sixth months
training expose me to the more challenging business world.
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