Critical Thinking

Through internal control to the Board or misuse

Through the 2016 Annual Report, the Board of
Directors expressed satisfaction that the Company’s risk management and
internal control operations were fully effective. In the annual report, the company
did not disclose the relevant information on risk management and internal
control system in detail and also maintain the internal control system and risk
management policy that has been used for the past five years. From that, it
shows that the company seldom reviews and evaluates its internal control system
and its risk management policies. However, not all risk management and internal
controls are perfect and flawed. In general, internal
auditors may focus only on the risks that need to be prioritized, ignoring
these small ones and fail to detect these frauds and errors
during the audit process. Not only that, it is possible that senior management does
not report relevant information about the failure of significant control over
internal control to the Board or misuse of the internal control system for
their own interest. This is a pseudomorph of a good internal
control system.

·      
MTD ACPI Engineering Berhad

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In the 2016 annual report, the Board considers that
the risk management and internal control system of the company is sound and
adequate and that deficiencies in internal control have been or are being
resolved during the financial year under review, although the relevant
information has not disclosed the details in full. It can be seen that the
company carefully reviewed the internal control system and risk management
policies compare to Ahmad Zaki Resources Berhad. Internal control deficiencies
may be due to lack of management supervision and perfunctory
attitude. Not only that, it’s possible that unethical behavior and poor
workmanship happen among the company staff as well as the senior management. This
happens because of poor internal control and poor corporate governance. Unhealthy
organizational culture and failure of significant control over internal control
always leads to poor performance of the company.

 

Compliance Risk

Ahmah Zaki Resources Berhad and MTD ACPI Engineering
Berhad

As qualifies contractor of civil engineering
and structural construction works, the both companies must able to comply with
rule and regulation that established by Construction Industry Development Board
(CIDB). The following rules and regulation that the must be comply with:

                
I.         
Federal Roads Act 1959

Bills declaring federal roads,
bridges, ferries and other modes of transport. The law applies to the whole of
Malaysia. The Minister may, in consultation with the government of the country
concerned, declare in any country any road, bridge, ferry or other means of
communication as a federation.

              
II.         
The Registration of Engineers Act 1967

The provisions of the registration
of engineers and wholly-owned enterprises, Partnerships and corporate bodies to
provide professional engineering services and related purposes

            
III.         
The Housing Development (Control and
Licensing) Act 1966

Provide for the control and
licensing of the housing development business in Peninsular Malaysia, protect
the interests of buyers and matters related thereto.

 

Other than that, the whole process of construction work
should follow the procedure and requirement which set by regulatory agencies
and associations like The Board of Engineers Malaysia (BEM), The
Board of Architects, Construction Industry Development Board
(CIDB) and other regulatory bodies until the completion of the construction
work. If the company fail to do so, they will be suffer huge losses. The
companies must also be responsible for any safety and quality issues before and
after the building or infrastructure is open to the public. In addition, the
cost of compliance has cost companies too much in order to get construction projects.

 

 

 

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