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Copy of GROUP PROJECT (EKOWOOD)

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Si Takeru

on 4 December 2014

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Transcript of Copy of GROUP PROJECT (EKOWOOD)

QUESTION 2
THANK YOU
BKAA3023 AUDITING AND ASSURANCE II
NURUL ADILLIA BINTI RODZI 221552
WAFA BINTI AHMAD FAISOL 221553
NOORFATIMA ZEHRA BINTI HAIRI 221554
NUR ATIKAH BINTI AHMAD 221561
NUR ASHIKIN BINTI ABDUL JALIL 221562
GROUP PROJECT (EKOWOOD)

4.3 What type of audit report was issued? Why is it so?

Unqualified audit report because:
• The Financial Statements have been prepared using the Generally Accepted Accounting Principles (GAAP) which have been consistently applied
• The Financial Statements comply with relevant statutory requirements and regulations
• There is adequate disclosure of all material matters relevant to the proper presentation of the financial information subject to statutory requirements, where applicable
• Any changes in the accounting principles or in the method of their application and the effects thereof have been properly determined and disclosed in the Financial Statements.

4.4 List out the entity’s subsidiaries. Did they have the same auditor? Were their accounts qualified?

Ekowood Company is the subsidiary of TSH Resources Berhad. The parent company also have the same auditor and produce the same auditor report. But Ekowood Company has taken bold step by setting up overseas subsidiaries and officer in Spain, USA, France, Hong Kong, China and Luxembourg

QUESTION 3
3.1 What are the statements enclosed by your entity? Are they similar to what you would find in the text book? Explain.

Statements of comprehensive income, Statements of financial position, Statements of changes in equity, Statement of cash flow and Notes to the financial statements. Yes, it is similar to what I would find in textbook because all of the statement should be prepared by all listed companies in Bursa Malaysia.

3.2 Comment on the format of the financial statements? Is there any standard format that entity has to follow?

The financial statements follow the typical format, means they are prepared accordance to accounting standards. This company prepared the financial statements in accordance with the approved accounting standards issued by the Malaysian Accounting Standards Board (MASB), Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the requirements of the Companies Act 1965 in Malaysia.

QUESTION 1
1.1. Name the entity understudy. How did you obtain the annual report?

Ekowood International Berhad. We obtain the annual report through Bursa Malaysia

1.2 Based on the types of industries classified by the Malaysia Bourse, your chosen entity falls into which category? Why did it fall into such category?

Consumer product industry. Because it supply product based on customer demand

QUESTION 4
4.1 Did the entity enclose the report? If not, what are the reasons?

Yes, the entity encloses the report.

4.2 Who audited the financial statements? Name the firm/auditor if possible.

ERNST & YOUNG, Chong Ket Yui

2.1 What is the image your entity is likely or trying to project?

A home-grown brand has made its imprint on world map of engineered hardwood flooring. Good quality engineered timber flooring from responsible sources is a preferable choice for most green building projects.


2.2 Based on the overall content of the report, how did the entity breakdown the information? What are the statutory and voluntary disclosures of items or information? Give examples.
The entity breakdown the information by:
1) Corporate information
2) Basis of preparation
3) Significant accounting policies
4) Auditor’s report on preceding annual financial statement
5) Seasonal or cyclical factors
6) Unusual items
7) Changes in estimates
8) Debt and equity securities
9) Dividend paid
10) Segment information
11) Valuations
12) Material event subsequence to the end of the reporting period
13) Change in composition of the group
14) Capital commitments
15) Changes in contingent liabilities and contingent assets
3.4 Does the entity have sound financial standing? How about the non-financial performance? Support your answers with some analysis.


Yes, the entity does have sound financial standing. Ekowood International Berhad is a profitable entity and they have adequate funds and assets. As from the financial statements, we can see that the entity has greater value in total assets than in total liabilities and its debt to asset ratio is 0.20 (RM29, 021,844/RM145, 719,632), therefore it is able to pay back its debt. The low percentage means that the company is less dependent of leverage such as many borrowed from others. Furthermore, the entity has debt/equity ratio of 0.35 (RM29, 021,844/RM84, 000,000) which is means company has been aggressive in financing its growth with debt.

3.2 Comment on the format of the financial statements? Is there any standard format that entity has to follow?

The financial statements follow the typical format, means they are prepared accordance to accounting standards. This company prepared the financial statements in accordance with the approved accounting standards issued by the Malaysian Accounting Standards Board (MASB), Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the requirements of the Companies Act 1965 in Malaysia.

3.3 Comment on the financial information provided by the entity? Are they adequate?

The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions (IASB Framework). The financial information provided by the company is adequate. This is because they provide a comprehensive and clear description of company’s financial position. Users of company’s financial statements should be able to ascertain the company's financial health by reviewing a financial statement with adequate disclosure.


5.1 Has the entity established an Audit Committee? When was it formed?

Yes, the entity is established an audit committee on 19 April 2004.


5.2 Did the entity list out names of the members? Are they independent or non-independent members? What is your view on the composition of members?

Yes, the entity list out the name of members
• The members are all independent
• The composition are follow by position

5.3 Did the entity state the Audit Committee’s terms of reference or charter? Describe.

Yes, the entity have state the audit committee’s term of references which included Constitution, Membership, Authority, Duties, Notice of meeting, Votes of members, Attendance at meetings

QUESTION 5
QUESTION 6
6.1 What are the economic factors that might have some influence on the performance of your entity? Explain.

• Taxes
• Interest rates
• Unemployment

6.2 Is there any development on current local rules, regulations, acts which your entity should be concerned about?

Developments on current local rules, regulations, acts:
• Role of the Audit Committee in Assuring Audit Quality
• Corporate Integrity System Malaysia : CEO Dialogue Session
• The implementation of Good & Services Tax
• The financial statements comply with the provisions of the Companies Act, 1965

6.3 Name and explain at least two (2) social factors that your chosen entity should pay attention to?


Creating loyal customers
• Employee training

QUESTION 7
7.1 What additional information would you like them to provide? Support your answer.

The additional information that should be included in the annual report of this company is corporate social responsibility (CSR).

7.2 Provide two suggestions on how the chosen entity may improve the quality of report?

• Use simple language
• Make it shorter

QUESTION 8

8.1 Based on the share prices analysis (eg: share prices monitored, graphs of price fluctuations, financial ratios calculated), and information gathered (Auditor Report, economic; social and legislative factors, performance analysis etc), please COMMENT on the going concern of this company.

The company incurred a loss RM13,506,190 during the year ended 31 December 2010. The company’s cash and bank balance which is RM3,537,915 and that the company the company has borrowed from bank RM14,012,401. Hence, the company may have a cash flow problem for the working capital for project development. Besides that, the company can’t give a dividend to the shareholders since the company have been loss in the 2010. Then the EPS of the company also provides negative (-5.64). It is not a good thing if the EPS negative. Since Ekowood International Bhd is a subsidiary of the TSH Resources Berhad, maybe the parent help their financial problem. So, the company can continue in the business until now, although the company has a loss in the profit in the 2010.
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