Perdana Sdn Bhd was founded by Rasyeed in the 1990s. The company start after being involved...
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Perdana Sdn Bhd was founded by Rasyeed in the 1990s. The company start after being involved in the construction sector since 1991 through the building of Rasyeed Enterpise. After five years, the company expanded the operations from general construction to specialised construction. Rasyeed mentioned the company's commitment to holding on to personal values such as honesty and integrity, a commitment to ethical practices, remaining humble throughout the growth of the company is the key to achieve the company's objective. Perdana has highly experienced knowledge workers and their expertise in planning and designing. Besides providing services to the private sector, Perdana also responsible for the construction of government projects. The quality of work is the utmost importance for Perdana Sdn Bhd by ensuring the contract is able to finish within the stipulated time and the performance has to complied with the terms of the contract. In addition, the company also has a reliable subcontractor with different specialties in the construction industry. In March 2020, the construction work was disrupted due to Covid 19. Some of the competent employees resigned due to reduction in salary. Kamal one of the resigned employees decided to use his knowledge, skills and experience to start a new company with his old friend in the construction industry. Project department Project A The company started to employ new workers for the pending project from the government and one of the projects is in Kuala Lumpur. During the construction, poor planning and monitoring by the supervisor on the construction had caused delay of where the initial plan was completion within 1 year. This delay had directly increased the construction cost. The cost increased by 30% from the original cost. Perdana had to stop the construction and the date of completion was delayed again. Up until ended of 2020, there was not much progress at the construction site. The government terminated the contract immediately with Perdana Sdn Bhd. Project B In October 2021, the new project to build an infrastructure in Kuala Selangor. The project manager met the general manager discussing the latest issue with the shortage of supplies. The supplier unable to supply the supplies due to current economic conditions. Project manager: General manager: Project manager: General manager: "There is a shortage of supplies. We cannot meet the timeline". "Then find the new supplier who can cover the shortage that will fit to our budget". "But sir, our supplier has been supplied for more than 10 years. We cannot just replace them. They meet our requirements and quality. Especially at our price". "A drop in quality is acceptable as long as it is not significant. It's still within the range. Just do what I told you". Accounting and finance department Due to several issues in project, Perdana failed to achieved the forecast of the profit. The general manager was so worried and decided to discuss with the finance manager since the issues will give an impact towards the shareholders' perspective. The general manager held a meeting with Sara, the finance manager. General manager: "Due to the economic conditions and project delayed on site, our profit will not have achieved the target. I think you are familiar with the earnings management to resolve this issue. We might lose our shareholders' confidence and trust". Finance manager: General manager: Finance manager: General manager: "We just disclose the actual amounts. The auditors will find out every little details. I don't want to take any risks. There is nothing we can do" "We can delay our expenses. We record the expenses for this year for future period. And since the cost invested in Research and Development is high. Why not we capitalised the research cost" "We can't do that. The auditor will find out". "Nothing is wrong. We will be recording the expenses for next year. It is not that we will not record at all. Is this your first time dealing with earning management? Just follow my instructions. If they find out, we will discuss and explain to them". "If you say so". Finance manager: They agreed to change the amount to boost the net profit. Payroll department Majority of the contract workers are foreigners. They are paid on a monthly basis by bank transfer for their contracted weekly hours and for any overtime worked in the previous month. If employees choose to be paid for overtime, authorisation is required by department heads of any overtime in excess of 30% of standard hours. If employees choose instead to take days off, the payroll clerks should check back to the 'overtime worked' report; however, this report is not always checked. The 'overtime worked' report, which details any overtime recorded by employees, is run by. the payroll department weekly and emailed to department heads for authorisation. The payroll department asks department heads to only report if there are any errors recorded. Department heads are required to arrange for overtime sheets to be authorised by an alternative responsible official if they are away on annual leave; however, there are instances where this arrangement has not occurred. ii. Discuss any FOUR (4) issues that arose in the project, accounting & finance, payroll department and provide FOUR (4) potential solutions. (20 Marks) (CLO2:PLO5:C5) Perdana Sdn Bhd was founded by Rasyeed in the 1990s. The company start after being involved in the construction sector since 1991 through the building of Rasyeed Enterpise. After five years, the company expanded the operations from general construction to specialised construction. Rasyeed mentioned the company's commitment to holding on to personal values such as honesty and integrity, a commitment to ethical practices, remaining humble throughout the growth of the company is the key to achieve the company's objective. Perdana has highly experienced knowledge workers and their expertise in planning and designing. Besides providing services to the private sector, Perdana also responsible for the construction of government projects. The quality of work is the utmost importance for Perdana Sdn Bhd by ensuring the contract is able to finish within the stipulated time and the performance has to complied with the terms of the contract. In addition, the company also has a reliable subcontractor with different specialties in the construction industry. In March 2020, the construction work was disrupted due to Covid 19. Some of the competent employees resigned due to reduction in salary. Kamal one of the resigned employees decided to use his knowledge, skills and experience to start a new company with his old friend in the construction industry. Project department Project A The company started to employ new workers for the pending project from the government and one of the projects is in Kuala Lumpur. During the construction, poor planning and monitoring by the supervisor on the construction had caused delay of where the initial plan was completion within 1 year. This delay had directly increased the construction cost. The cost increased by 30% from the original cost. Perdana had to stop the construction and the date of completion was delayed again. Up until ended of 2020, there was not much progress at the construction site. The government terminated the contract immediately with Perdana Sdn Bhd. Project B In October 2021, the new project to build an infrastructure in Kuala Selangor. The project manager met the general manager discussing the latest issue with the shortage of supplies. The supplier unable to supply the supplies due to current economic conditions. Project manager: General manager: Project manager: General manager: "There is a shortage of supplies. We cannot meet the timeline". "Then find the new supplier who can cover the shortage that will fit to our budget". "But sir, our supplier has been supplied for more than 10 years. We cannot just replace them. They meet our requirements and quality. Especially at our price". "A drop in quality is acceptable as long as it is not significant. It's still within the range. Just do what I told you". Accounting and finance department Due to several issues in project, Perdana failed to achieved the forecast of the profit. The general manager was so worried and decided to discuss with the finance manager since the issues will give an impact towards the shareholders' perspective. The general manager held a meeting with Sara, the finance manager. General manager: "Due to the economic conditions and project delayed on site, our profit will not have achieved the target. I think you are familiar with the earnings management to resolve this issue. We might lose our shareholders' confidence and trust". Finance manager: General manager: Finance manager: General manager: "We just disclose the actual amounts. The auditors will find out every little details. I don't want to take any risks. There is nothing we can do" "We can delay our expenses. We record the expenses for this year for future period. And since the cost invested in Research and Development is high. Why not we capitalised the research cost" "We can't do that. The auditor will find out". "Nothing is wrong. We will be recording the expenses for next year. It is not that we will not record at all. Is this your first time dealing with earning management? Just follow my instructions. If they find out, we will discuss and explain to them". "If you say so". Finance manager: They agreed to change the amount to boost the net profit. Payroll department Majority of the contract workers are foreigners. They are paid on a monthly basis by bank transfer for their contracted weekly hours and for any overtime worked in the previous month. If employees choose to be paid for overtime, authorisation is required by department heads of any overtime in excess of 30% of standard hours. If employees choose instead to take days off, the payroll clerks should check back to the 'overtime worked' report; however, this report is not always checked. The 'overtime worked' report, which details any overtime recorded by employees, is run by. the payroll department weekly and emailed to department heads for authorisation. The payroll department asks department heads to only report if there are any errors recorded. Department heads are required to arrange for overtime sheets to be authorised by an alternative responsible official if they are away on annual leave; however, there are instances where this arrangement has not occurred. ii. Discuss any FOUR (4) issues that arose in the project, accounting & finance, payroll department and provide FOUR (4) potential solutions. (20 Marks) (CLO2:PLO5:C5)
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Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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