Latest Report2

Jamal, Amin & Partners AF 1067

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INDUSTRIAL TRAINING REPORT

1.0 INTRODUCTION

Industrial Training is one of the programme that has been offered

by Management and Economics Faculty, Universiti Malaysia

Terengganu (UMT). For Accounting student, Industrial Training is

compulsory and should be done on semester 8. This programme represent

six credit hours of the courses and will be counted in the Cumulative Grade Per

Average (CGPA) and Grade Per Average (GPA). The encouragement of

Faculty to put their student in audit firm for six month is the right

decision because by undergoing Industrial Training, student will be

placed in government or private sector where they will be given the

opportunity to learn and adapt in the real working environment. In this

audit firm, the student will familiar in various fields such as accounting,

taxation, secretary and auditing. From there, the student definitely will

achieve the objectives as follows:

The experience and basic working skills that related to the theory

learned.

Able to apply theory learned to the real working environment.

Able to understand the value of professional ethics.

Able to improve communication, management and other skills as

well.

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Able to provide high standard of professional practice.

2.0 ORGANIZATION BACKGROUND AND STRUCTURE

2.1 History of Organization

Jamal, Amin Partners firms is a Chartered Accountant and

was founded in 1994 by Tuan Haji Jamaluddin Bin Shahidan and Tuan

Haji Aminuddin Bin Haji Yahaya as partners of the firm. Jamal, Amin &

Partners has established as a well known medium size audit firm with a

client based from various industries including Government Link

Companies (GLC), cooperative clients, offshore clients, private sectors,

universities and others.

JAP currently has seven (7) branch offices i.e. Kuala Lumpur, Alor

Star, Penang (Northern Region), Johor Bharu (Southern Region), Kota

Bharu (East Coast Region) and Labuan (East Malaysia Region) including

branch in Kangar, Perlis Indera Kayangan. By opening this branch in

Kangar in January 2005, its mean that JAP successfully cater in the

whole country of Northern Region. In the future, JAP plan to open

another new branch office in Kuantan, Kuala Terengganu to cater the

East Coast Region, Ipoh, Melaka and Seremban (Central Region) and

Kota Kinabalu and Kuching (East Malaysia Region). Thus, JAP will be

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having branches in all states of Malaysia and be the only audit firm in

the country that has branches in all states.

Behind of the successful of the firm, Tuan Haji Jamaludin Bin

Shaidan as managing partner was joined Maju Holding Group of

Companies as an Accountant (Contract Basis) in 1985. In 1986, he

joined Bank Bumiputra Malaysian Berhad and was attached to Shah

Alam branch as Head of Account Department. Tuan Haji Jamaluddin

was joined one of the reputable Public Accountant Firm, as an Audit

Assistant in 1990, to pursue his career in auditing and finance

advisory. He has earned as an Audit Manager before he left the firm at

his own accord. He is also a member of Malaysian Institute of

Accountant.

Tuan Haji Aminuddin Bin Haji Yahaya holds a professional

qualification of Chartered Association of Certified Accountants (ACCA),

United Kingdom in 1987. After his qualification, he joined Ernst &

Young International in 1988 as an Audit Assistant and was later

promoted to Audit Senior. He was later transferred, at his own request,

to Tax Department. In February 1994, he joined Securities Commission

as Finance Manager. Tuan Haji Aminuddin is a member of Malaysian

Institute of Accountants and Malaysians Institute of Taxation. He is a

fellowship of Chartered Association of Certified Accountants (UK).

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JAP has successfully obtained an offshore license from

Labuan Offshore Financial Services Authority (LOFSA) in order to

enhance their service position. With this recognition, JAP has moved

ahead in international market especially for offshore companies and

thus, it will definitely boost the image of the firm. JAP also have

international associate’s firm in Indonesia, Singapore, United Kingdom,

Hong Kong and Saudi Arabia to enable in putting their name and

standard to the same level with big firm in Malaysia with the like such

as PricewaterhouseCoopers, Ernst & Young and KPMG.

2.2 Objective of Organization

The objectives of Jamal, Amin and Partners are:

Able to be an established firm recognized locally and

internationally.

Able to provide first class services to clients by setting up

branches throughout Malaysia supported by competent

professional in various field.

Able to produce competent and highly trained chartered

accountants and provide opportunities (particularly to the locals)

to be future practicing partners.

Able to assists clients to expand their business network and

opportunities locally and internationally.

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3.0 ORGANIZATION CHART

3.1 Jamal, Amin & Partners

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Board of Partners

Corporate Monitoring Committee

Managing Partner

Executive Partner

Finance & Administration Division (FAD)

Operation Division (OD)

Business Development Division (BDD)

General Manager I General Manager II General Manager III

General Manager I


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3.2 Jamal, Amin & Partners (Kangar’s Branch)

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Planning & Development Department

(PDD)

Implementation & Enforcement

Department (IED)

Marketing & Public Relation

Department (MPD)

General Manager II

Finance Department (FID)

Administration Department (ADD)

Finance Services Section (FSS)

Collection Recovery Section

(CRS)

Branch Administration Section (BAS)

Office Administration Section (OAS)

Human Resource

Section (HRS)

General Manager III

Audit Departmen

t(AUD)

Training & Quality Control

Department

(TQD)

Information Communication Technology Department

(ITD)

Accounting Departmen

t(ACD)

Branch Operation

Department

(BRD)

Taxation Departmen

t(TXD)

Consultation

Departmen

Kuala Lumpur

Kota Bharu

Johor Bharu

Alor Setar

Penang Kangar

Labuan Seremban


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3.3 Audit Department

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Branch Manager

Associates I

Associates II

Admin & Accounting

Trainee

Deputy President II

Partner

Senior Vice President I

Principal

Senior Vice President II

Deputy President I


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4.0 THE FUNCTION OF DEPARTMENT

4.1 Audit

Jamal, Amin & Partners audit approach is depend on the

requirement by clients but in most cases it covers both financial as

well as non-financial aspects of the acquire company. Understanding

that JAP work, to large extent, provide as a crucial input to acquirer’s

decision, a detail work on the account balances is thus necessary.

Physical inspection of assets or documents is conducted whenever

possible, third party confirmation is requested and even liaise with the

authority will be conducted.

JAP expresses an opinion as to whether the Financial Statements

for the financial period under review show a true and fair view. In this

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Vice President II

Senior I

Vice President I

Senior II

Senior III Associates Trainee


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regard, JAP is guided by professional standards which would act to

meet with the requirements of generally accepted accounting practice

and the Companies Act 1965.

A feature of the firm’s value added approach to the audit

functions is results obtained from the use of analytical software to

identify areas where performance can be improved. This often leads to

recommendations for enhancement of systems and procedures.

JAP procedure are developed specific in relation to each client,

and take into account factors of understanding client’s operation,

management’s concern and internal control structure and procedures.

In addition to statutory audits, they have also been involved in

various engagements as follows:

Due diligence

Share valuation

Corporate advise on listing exercise

Financial consultancy

Here are some of Jamal, Amin & Partners audit client:

Perbadanan Kemajuan & Ekonomi Negeri Perlis (PKENPs)

Majlis Perbandaran Kangar (MPK)

Yayasan Islam Perlis (YIPs)

Persatuan Nelayan Negeri Perlis (PELARIS)

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Persatuan Nelayan Kawan Kuala Perlis (PNK Kuala Perlis)

Putra Palace Sdn. Bhd

Majlis Amanah Rakyat (MARA)

Koperasi Jabatan Kerja Raya Perlis Berhad (KORAYA)

4.2 Tax Department

One of the major issues in most companies is taxation. Unless a

proper tax planning being structured, a company may face huge tax

liability. Jamal, Amin & Partners understand that clients expect to have

the all tax planning and consulting expertise to reduce tax exposure

and to minimize returns to the shareholders. In this regard, Jamal,

Amin & Partners with expertise try to match with clients specific needs

by concerning:

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To maximize the Company’s earnings by minimizing its exposure

to taxation.

To minimize the impact of interest restriction.

To maximize the use of tax exemption and relief in the

Company’s project and venture.

To set up appropriate structure for the purpose of tax efficient

intercompany transaction.

Jamal, Amin & Partners tax consultancy services includes:-

Identifying tax inefficient in client’s company and investment

activities thus recommend solutions to overcome them.

Recommending a structure which will minimize taxes and which

will provide efficient distribution of income.

Providing a broad framework of tax strategies in the Company’s

business and investment activities (including pitfalls to avoid).

Recommending creative and helpful tax planning ideas and

solutions through regular discussions with clients.

Identifying major tax issues at an early stage and

communicating these issues to clients.

Providing experienced tax executives who are able to resolve

tax issues.

4.3 Corporate Secretary Department

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The functions of corporate secretary department are to provide

secretarial services to several clients. In Jamal, Amin & Partners, their

secretarial services cover:-

Incorporation or formation of companies and business

registration.

Corporate advisory services.

Company search services.

Applications for work permit for expatriate personnel.

Application for Foreign Investment Committee approval for

foreign interest in companies incorporated in Malaysia.

Application for registration with Pusat Khidmat Kontraktor.

Application for registration with Ministry of Finance.

In the area of secretarial, Jamal, Amin & Partners responsibility

includes:

Assisting the company in complying with the Companies Act,

1965 and other legislation having relevance there to.

Attending to meetings of the directors, members and

committees as and when so required to do so.

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Operating as a Registered Office which can be contacted by the

public (Section 119 of the Companies Act, 1965).

4.4 Admin and Account Department

The functions of the departments are as follow:

Send draft and final audit report to client

Issues billing to the client

Prepare client monthly statement

Prepare staff claim and salary

Prepare monthly report to Head Quarter (HQ) in Kuala Lumpur

5.0 INTER- DEPARTMENT RELATIONSHIP

All the department in the Jamal, Amin & Partners has inter-

relationship between each other. Audit department will pass the draft

audit report together with the working paper to the Branch Manager

for review. After the draft complete with amendment, Admin and

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Account department will send draft and Letter of Representation (LOR)

to client. If client agreed with the draft audit report, Admin and

Account department will print out for final report to be signed by

partner and client.

During the initial audit process, audit department will obtain from

tax department last year tax computation to be included in the

working paper for references in computation of deferred tax. After the

audit report has been signed, tax department will request from audit

department the audited account together with the audit working

paper. Tax department will rely on the draft audit report and audit

working paper to get information for them to calculate tax for client.

After that, the working paper will be passed back to the audit

department to close the working paper for the year. Admin and

Account Department normally will send the audit report to the client.

For Corporate Secretary Department, the Audit Department

needs the up-date information from Secretary Department to prepare

statutory audit. Corporate Secretary Department will send the audit

report to Registrar of Company (ROC) and Inland Revenue Board (IRB).

6.0 KNOWLEDGED AND SKILLED LEARNED

6.1 General Knowledge and Skilled

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During my practical training for almost 6 month in Jamal, Amin &

Partners, I have learned a lot of knowledge in the areas of auditing.

Now, I understood that there are very different studying through books

and doing a work in auditing field. While working in the audit field, I

learn the actual situation that what is going on with the accounting

entries, the real documents involved in daily transaction, facing with

various clients, the procedure that need to follow as an auditor and

become aware with the current issue around my place.

I also learn to adapt myself to be independence and ability to

solve the problems were the most important skills that I have got. I’m

able to carry out responsibilities assigned, always on time and keeps

appointments as required by clients and higher management. Learning

to become more responsibility, where every work done will be our

responsibility until it become to the final stage.

Sometime audit work can give so much of pressure. I need to

motivate myself not to get so emotional and learn to take the pressure

as a challenge to or to solve any kind of issue pertaining to work or

environment. The critical part that I need to be able to control my

emotional is during the review stage.

There are others general skill that I learn in Jamal, Amin &

Partners are leadership, willingness to learn, flexibility, ability to learn

and adapt new knowledge.

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6.2 Step in the Auditing

1. Set up new file for auditing

2. Calculate audit fee for client and sent to Branch Manager

for review

3. Opening balance was taken from the last year audited

account

4. Agreed all the Trial Balance to the respective General

Ledger

5. Vouching-to make sure the true of the document

6. Prepare working paper for profit & loss and balance sheet

For the working paper, there are some indexes in order to

prepare the working paper of audit and the index involved are:

A - A1 - Audit Administration

A2 - Summary Review Management

A3 - Other documents – Letter of Representations (LOR)

A4 - Management Letter (ML)

A5 - Financial Statement

A6 - Consolidation Checklist and Working Papers

A7 - System Evaluation

A8 - General Audit Procedure

B – B1 - Property, Plant & Equipment

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B2 - Intangible Assets and Deferred Expenditure

B3 – Research & Development Expenditure

B4 - Investment

B5 - Cash & Bank Balance and Borrowings

C – C1 - Trade Debtors

C2 - Other Debtors, Deposits and Prepayments

C3 - Amount Due From / To Related Companies / Directors

D – D1 - Inventories, Work In Progress / Progress Billings

D2 - Amount Due To / From Customers

D3 - Development Property

E – E1 – Trade Creditors

E2 – Other Creditors and Accruals

E3 – Lease / Hire Purchase Creditors

E4 – Taxation Including Deferred Tax

E5 – Capital Commitments and Contingent Liabilities

E6 – Post Balance Sheet Events

F – Profit & Loss

7. Acknowledgement and confirmation letter

Bank confirmation send to bank to confirm the client balance

Debtors and creditors confirmation letter

8. Draft for report & financial statement except for

government

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9. Prepare Summary Review Management (SRM)

10. Prepare Letter of Representation (LOR)

11. Prepare Management Letter (ML) for government only

12. Sent draft audit to Branch Manager for review

13. Sent draft audit with LOR to Head Quarters of Jamal, Amin

& Partners in Kuala Lumpur

14. Partners will sent signing page and all the audit draft will

be casting check

15. Tax department in Kedah will calculate for client tax based

on the audit working paper and report and financial statement of

client

16. Secretary Department in Kedah will prepare the statutory

audit for client

17. Print out draft for discussion & meeting with client

18. Print out final audit report

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Audit Department

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Prepare Working Paper

Do Audit Work

Go to office

client

Doc in OfficeYe

s

W/P Comple

te

No

Prepare Draft Report & Financial

Statement

Send to Branch Manager for

Review

Amend

Prepare draft to client

Yes

NoYes

No

Update W/P

1st Draft Report & Financial

Statement

Send to Admin

Department

Any Amendments

Prepare Summary Review of

Memorandum (SRM)

Prepare Management Letter (ML)

*Government only

Client Accou

nt


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Admin Department

V

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1st Draft Financial

Statement

11

13

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Send to Client

Reply from Client

Send Signing Pages to

Director to Sign

Any Amendments

Partner Sign

Finalise

Amend

Prepare Draft Financial

Statement

Yes

No

No

Yes

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Audited 1 Financial Statement

JAP

Dormant

Company

Active Compa

ny

Client

CCM

Tax

Roc

Audited 1 Financial Statement

JAP

Client

CCM

ROC

Tax


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V

6.3 Knowledge and Skill Learned In Performing Audit

During the period of my practical training at Jamal, Amin &

Partners, I had been assigned to do audit for several clients. Each

client the audit team is head by a team leader which is a senior

auditor. The team leader will allocate the section that should be done

to each person in the team. Here are the sections that I have done

during the period of Industrial Training and the skilled that I had

learned in performing the audit.

6.3.1Compliance Test

Read and understanding the flowchart system for payment

process.

Discussing with management about the procedure.

Choose one sample of payment voucher for 12 month by using

fixed or random sampling for walkthrough test.

Check payment voucher and request form whether has been

authorized by the related person or not.

Make sure that there are supporting document.

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Client Paid Audit Fee


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Make sure that amount in payment voucher are same with the

amount in invoice and request form.

Check for the transaction in bank statement.

Make sure that transaction has been transfer to ledger system

and vote book.

Make sure that the transaction has been classified in the correct

account.

I also have done compliance test for receipt, additional fixed

asset, computer loan, vehicle loan, quotation price, salary and

rental during my practical training.

6.3.2Property, Plant & Equipment

Obtain fixed assets register and fixed asset listing. Then, prepare

the schedule of PPE.

Doing physical sighting on assets listed in fixed asset listing to

ensure the existence of that particular asset.

Agreed total in the listing to the trial balance and general ledger.

Identify new addition for the current year by test check to

suppliers’ invoices. For instance:

Motor vehicle – Register card

Land and building – SAP agreement and Form 14A /

Grant

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Check the ownership of the assets and ensure that is under the

company’s name, if not under company’s name, need to disclose

in Notes of Financial Statement.

Depreciation methods should be reviewed annually. If

expectations are significantly different from previous estimates,

the depreciation charge for the current and future period should

be adjusted (FRS 116).

Enquire and check whether any items has been scrapped or

destroyed and ensure appropriate record have been kept,

authorized and accounted properly.

For land, need to verify that the basis of valuation is acceptable

and reasonable.

Determine which items should be expensed or capitalized based

on the capitalization policy of the company.

Check the insurance coverage for PPE and ensure it is sufficient

and check the insurance expenses account whether all motor

vehicles, building, plant & machinery are taken up in Profit and

Loss.

Consider whether there are any impairment of PPE as per FRS

136.

6.3.3 Cash and Bank Balances

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Obtain the cash book from client and agreed balance to trial

balance.

Obtain bank reconciliation from client and agree the figure to the

cash book and bank statement as at year end.

Note all long overdue cheques that still unclear for more than 6

months. Normally cheque will expire 6 month after it had been

issued.

Check subsequent clearance for unpresented cheque and deposit

in transit to subsequent bank statement.

Send bank confirmation to ensure that the balance agreed with

the bank statement and all liabilities have been taken up. If the

account is on overdraf, ensure that it does not exceed its limit.

For petty cash, perform the cash count on the petty cash at the

day of audit been done and reconcile it to the year ended.

Review cash book and ensure the cheques are in sequential

order.

6.3.4Trade Debtors

Obtain the trade debtor listing and agreed balance to the trial

balance. Agreed the individual balance to individual ledgers.

Test check debtors balance to the invoices and debtors

statement.

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Check subsequent payment.

For provision of doubtful debts, check whether client has any

policy with regards to provision for doubtful debts.

Review the aging listing and note long overdue debts for more

than 12 month.

Test check for the subsequent payment and consider any debts

which need to be written-off.

Discuss with management on the company’s credit policy and

ensure that it has been complied with.

6.3.5 Deposits and other debtors

Obtain breakdown of deposits and other debtors and agreed to

the general ledger.

For the deposits, check to the original receipt.

Test check to other debtors balances to the supporting

documents.

Check subsequent clearances.

Sent confirmation to the debtors for the large balance.

Ensure that there is no trade debtor balances included in the

other debtors listing.

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For old balances, discuss with management for possible

provisioning.

6.3.6 Trade Creditors

Obtain trade creditors listing and agreed to the general ledger.

Agreed individual creditors balance to the creditors ledger.

Agreed large individual balances to the creditor’s statement (if

applicable). Enquire for large variances.

Send creditors confirmation wherever possible.

Search for unrecorded liability, check to suppliers’ statement and

agreed to the ledger balances. Explain for any variances.

Review for any unpaid invoices as at year end and check to

creditors’ ledger to ensure that it has been taken-up.

6.3.7Sales / Turnover

Obtain detailed schedule Profit & Loss account and agreed

balance to trial balance.

Perform cut-off test by obtaining last 5 sales invoices for the

period and first 5 sales invoices in subsequent year to ensure

that sales are taken up in the correct period.

When vouched to invoice or delivery order, ensure the

calculation, approval, acknowledgement pricing are in order.

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Compare current year results against last year results (perform

analytical review). Then, comments on major differences.

Compute the gross profit margin and compare with last year

result and comments on major differences.

Identify goods in transit.

6.3.8Purchase

Obtain schedule of expenses and agree total balance in the

schedules to the trial balance.

Compare current year’s expenses with last year’s expenses and

note for the major differences.

Vouch selected sample to the payment voucher, journal voucher,

debit note and other supporting documents to ensure amount

stated are at the correct amount.

For salary include details of directors’ salary. The other items

likes EPF & SOCSO as included under staff cost, which should be

disclose under FRS 101. For salary, need to state numbers of

staff while for EPF need to do reasonable test for employer

contribution by calculating the percentage of EPF to salary and

bonus. Directors’ remuneration includes fee, salary allowance,

and bonus. For instance fee should be disclose separately and

state name and nature of payment.

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For rental such as rental of premises or land obtain rental

agreement and agreed the rental stated in the agreement. In the

working paper, need to state recipient or landlord name and

address, premise address and monthly payment.

For audit fee, calculation based on MIA schedule. For the

dormant company, the standard audit fee is RM 500.

Review repair & maintenance expenses to ensure no capital

expenditure was included.

6.3.9List of Companies

List of companies that I have been assigned to perform audit in Jamal,

Amin & Partners are:

1. Government

Perbadanan Kemajuan & Ekonomi Negeri Perlis (PKENPs)

Yayasan Islam Perlis (YIPs)

2. Association

Persatuan Nelayan Negeri Perlis (PELARIS)

3. Subsidiaries Company of Perbadanan Kemajuan & Ekonomi Negeri

Kedah (PKNK)

Agro Botanical Garden Sdn Bhd

Kedah Overseas Trading Network Sdn Bhd

Kedah Credit & Leasing Sdn Bhd

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Langkawi Seafood Sdn Bhd

Tebus Samudera Sdn Bhd

4. Subsidiaries of Majlis Amanah Rakyat (MARA)

Novel Caterers (M) Sdn Bhd

Yayasan Matri Perlis

Absolute Base Sdn. Bhd

6.4 Communication Skills

Communication skills are the vital in the working environment.

The key skills that learn during practical training are verbal

communication, written communication and team work. The

experience working in audit firm bring me more confident in dealing

with different level of people. I have improves the ability to

communicate where there is a huge differences as a student I only

communicate to my fellows friends and lecturer. It helps me to develop

my communication skills. During my practical training, I need to call

and ask client regarding the queries. From here I’m try to become

more confident in dealing with clients.

7.0 ISSUES HIGHLIGHTED

In performing the audit for client, a have face several issues relating to

the client accounts:

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7.1 Company A

A is a State Government Agencies (GLC). In performing

audit for company A, we facing major issues that related to their

account and the type of audit report for the said agencies is

Disclaimer Report. The issues that interesting to highlight are:

7.1.1 Issue 1: PPE Register

A failure to prepare a complete of PPE Register. We are unable to

verify the amount of net book value for Plan, Property & Equipment

(PPE) which amounting to RM 6,820,859. We cannot perform the

physical sighting during performing the audit to ensure the existence

of PPE. We are unable to ensure whether A has ownership to the PPE,

to ensure that the PPE are properly revalued accordance to as

specified in FRS 116 and Company Act Schedule 9 thus our objective to

ensure that all PPE transactions are completely recorded are failure.

During auditing, we found that not all land and vehicle grants are in

their keeping. Then, we cannot verify the ownership of the assets,

where this related to FRS 120 Accounting for Government Grants and

Disclosure of Government Assistance. In the working paper, we

conclude that we cannot give true and fair view of opinion for amount

of PPE.

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The recommendation for solution is discuss and advise

management to prepare the complete PPE Register by include

information about date of purchase, description about assets, cost,

rate of depreciation, current depreciation, accumulated depreciation

and net book value of assets then make necessary adjustment to their

accounts. We also advise A about PPE Register in management letter.

The complete tagging also recommend such as for furniture and fitting.

Then, this can bring more easily for physical sighting process.

7.1.2 Issue 2: Accrual Basis

We have found that A have used cash basis in recording rental

income for the year such as Sewa Tanah, Kolam Udang, dan Tapak

Bangunan (RM 168,323.00) and Sewa Tapak Kilang Ais (RM 74,00.00).

These bring effect to rental income 2006 was included into rental

income for the current year. For 2007, we found that rental income

that not accrued by A amounting to RM 15,216.67. Based on the

record, we can conclude that A not complies with FRS 101 Presentation

of Financial Statement.

For solution, we recommend that A to record the rental income

by using the accrual basis as specified by approved accounting

standard in Malaysia, so that rental income not over or under stated

during the year. After discussion with client, they agree to take up the

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accrued interest portion in 2006 in their account. At the same time,

auditor also advises in management letter to ensure that client record

does not have the same mistake.

7.2 Company XY

XY is one of the State Government Link (GLC), where we have

audited their financial statement for year ended 2007 and 2008.Their

nature of work are as a main contractor in construction of building,

rent and sales their project likes building or house. Here are several of

the major issues that can we highlight to be discussed:

7.2.1 Issue 3: Consolidation of Financial Statement

XY have 11 subsidiaries and the report for 5 of their associates

are not consolidate in financial statement of XY in the appropriate form

and content as specified in FRS 127, “Consolidated Financial

Statements and Investment in Subsidiaries” and FRS 128, “Investment

in Associates” due to the appropriated audited financial statement are

not given by subsidiaries to console.

For solution, we advise that if XY not prepare consolidated

financial statements, XY need to disclose that the financial statements

are separate financial statements and it’s exempted from preparing

consolidated financial statements and state list of significant

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investment in subsidiaries and associates and a depreciation of

method used to account for these investment. In the same time, we

also advise in management letter.

7.2.2 Issue 4: Standard Operating Procedure (SOP)

Based on our observation, XY still did not have complete and

detail of Standard Operating Procedure (SOP), where can be use by

their staff. This is important to make sure the uniformity, the

effectiveness and efficiency in XY operations. Furthermore, concerning

on understanding of the standard is very important. The standard

operating procedure includes for recording and controlling any product

or services provide that are not met the specification that needed by

XY.

We recommend that XY to take note about the matters that

related with internal control, so that there is no mistake done against

by XY, which can give effect to their management control. The details

of SOP is important to make sure that the XY’s operation are in the

track and all the procedure that need to follow by all staff of XY will be

followed then can bring guideline for them.

7.2.3 Issue 5: Segregation of Duties

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Based on our observation, we found that XY still have problem of

segregation of duties because we can see that several staff need to

the multiple work in once time. For example, the same person should

not authorize the payment of a bill and also sign the cheques in

payment of the bill. Naturally, the extent of separation of duties

depends heavily on the size of the organization, in many small

companies, it is not practical to segregate the duties, but in this case,

the segregation of duties is needed because of XY have a complexity

size of organization structure.

For the solution, we recommend that segregation of duties needs

to be implemented to compensate for these potential overlaps of

duties and to avoid from fraud risk. The distinction between

authorization and approval is important. Authorization is a policy

decision for either a general class of transactions or specific

transactions while approval is the implementation of management‘s

general authorization decisions. Segregation of duties is one of the

control objectives that relate to policies and procedures. We also

advise XY in management letter.

7.2.4 Issue 6: Internal Audit

There is no internal audit in XY. The internal audits are expected

to provide value to the organization through improved operational

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effectiveness, in addition to traditional responsibilities such as

reviewing the reliability and integrity of information, ensuring

compliance with policies and regulations, and safeguarding assets.

Without internal audit can contribute XY with risk likes inefficiency

management, fraud and unlawful.

We suggest to XY to set-up the internal audit division in helping

them to strength the position of XY, by employ their own staffs to

perform internal auditing. Based on ISA 610 Considering the work of

Internal Auditing also permits the external auditor to use the internal

auditor for direct assistance on the audit. Relying on the internal audit

staff performance of some of the audit testing may allow the audit to

be completed in the less time and for a lower fee.

7.2.5 Issue 7: Investment Property

During auditing, we found that one of the building held by XY

initially held for sale but are being rental by Z and others tenants.

Based on IAS 25,” Accounting for Investment” where, the assets are

held for rental or increment in value can be classified as investment

property.

FRS 140 states a property interest that is held by a lessee under

an operating lease may be classified and accounted for as investment

property provided that the rest of definition of investment property are

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met, the operating lease is accounted in accordance to FRS 117 Leases

and the lessee uses the fair value model for the asset recognition.

We recommend that the assets should be classified as

investment property for assets that held for rental and not record as

inventory as recorded by client. Properties held for investment are

those held to earn rental or to be benefit from appreciation in value or

both. The adjustments due to wrongly classification of asset are

needed to do.

8. CONCLUSION

For conclusion, industrial training can give a lot of benefits to the

students, a lot of useful experience and knowledge in the auditing and

accounting field. This training is like a self preparation for student to go

through the real working experience in the future.

During six months industrial training, I can feel how the real

working environment is. Besides that, a long this training period, I have

learned how to discipline myself with the planning done before starting

the audit work and by following on schedule given by manager to

complete the task given.

This experience is not only focus on audit work, but also in

communication skill, where, during the perform audit filed work I need

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to arrange appointment with client when there is needed for deep

explanation and more exposure that I got during dealing with various

level of clients. These experiences are very valuable to me for future

career.

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Documents

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