Report of Fcb Case
Its primary operation was to provide air freight transportation which including air freight services, air freight handling services and leasing. FCB was aimed to maintain their niche position not only in the Asia Pacific region but also in China, Thailand and India by delivering best quality customer service and satisfying customer demands. Among of its customers are Worldwide Express, United Parcel Services (UPS), Nationwide Express, Citylink, Bax Global, Nippon Express, Cargo Malaysia Services and Bangor Berhad.FCB had appointed Kenchana& Associates as its external auditor. The Protagonist Mr Chuah Mun Soong is the main character in this case. He is an auditor for FCB.
He needs to present the financial report of Flat Cargo Berhad to the audit committee of FCB in two weeks. However, there are several inconsistencies reported by his subordinates in the accounts of FCB. The main problem faced by Mr Chuah is there might be high possibility that his client company (FCB) involved in fraud. Mr Chuah had dilemma either to continue servicing this client company or not.Kenchana & Associates reputation might be affected if FCS is really proven to be involved in fraud. The major issue in the case is the inconsistencies in the accounts of FCB. FCB had incorrectly recorded the loan from Hong Kong company to be in its debtors’ account.
Report of Fcb Case Essay Example
This posed some questions to auditors’ side whether it is intentionally or not to record it in debtor’s account. The auditors manage to identify several suspicious transaction and recording involving non-current asset and current asset.For example, the auditors found that there is no valid purchase document of aircraft by FCB in 2005 as claimed in the FCB’s financial statement. Further investigation was also found that there is non-functional rundown aircraft in a hanger which might lead to overstated of non-current asset in 2005. Besides that the auditors manage to notify certain debtors’ and sales revenues’ account that found to unverified. In addition, it was also found that loan received from Hong Kong based company was incorrectly recorded in the debtors’ account which lead to overstating the current asset. Inflated .
All evidences above were among the issues that posed serious problems. Another issue that should have to be concerned in this case is the issue of its corporategovernance and internal control. It is really something suspicious when it comes to the appointment of FCB’s Board of Directors. Even though it had been specified that the composition of the Board of Directors was in adherence to the Malaysian Code of Corporate Governance, something seems to be not right when it comes to the person called Ali bin Ahmad, one of FCB’s Board of Directors.In FCB’s Company, Ali bin Ahmad was not only one of the Directors, but he was also one of theAudit Committee and one of the top management for FCB. At this point, the possibility of unethical conduct could be arisen from the top management, Ali bin Ahmad since he was seemingly had an access and more authority as one of FCB’s Audit Committee. Brief description of case exhibits In Income Statement, the revenue of FCB is steadily increasing from year 2001 until 2005.
However, according to auditors, no supporting documents available for several sales transactions in 2005.