MAF671

INTEGRATED CASE STUDY

CASE STUDY 1
WRITE-UP ASSIGNMENT
PREPARED FOR:
PM DR TUAN ZAINUN BINTI TUAN MAT

CLASS:
AC2208L
NAME STUDENT ID
NUR FATHIHAH BINTI JAMAL 2017668566
NUR HIDAYAH BINTI MAZLAN 2017668408
 Audit committee is to assist Board of Directors (BOD) in discharging their duties relating to company
management and internal control, accounting policies and financial reporting and a line of communication
between the board and the auditors.

At Mentara Bhd, the audit committee comprises four members which are Jalil and three other
directors. However, none of them have financial expertise. The Chairman of the audit committee is Datin
Jasmin who is Dato’ Johan’s wife. The Committee only meets once in a year, which is right before the
Annual General Meeting (AGM). These situations may lead to ineffectiveness of the audit committee.
Therefore, Mentara Bhd should take appropriate action to improve effectiveness of its audit committee.

According to Bursa Malaysia Listing Requirement relating to the composition of the audit committee,
a listed issuer must appoint an audit committee from amongst its directors which fulfils the following
requirements:

a) The audit committee must be composed of not fewer than 3 members;

b) All the audit committee members must be non-executive directors, with a majority of them being
independent directors; and
c) At least one member of the audit committee –
i. must be a member of the Malaysian Institute of Accountants; or
ii. if he is not a member of the Malaysian Institute of Accountants, he must have at least 3
years’ working experience and –
 he must have passed the examinations specified in Part I of the First Schedule
of the Accountants Act 1967; or
 he must be a member of one of the associations of accountants specified in Part
II of the First Schedule of the Accountants Act 1967; or
iii. fulfils such other requirements as prescribed or approved by the Exchange.

In addition, to improve the effectiveness of audit committee, the members of an audit committee
must elect a chairman among themselves who is an independent director. The Committee should meet at
least twice during each financial year and hold such additional meeting as the chairman shall deem
necessary in order to fulfil its duties.

In the nutshell, audit committees are identified as effective means for corporate governance that
reduce the potential for fraudulent financial reporting as they oversee the organisation’s management,
internal and external auditors to protect and preserve the shareholders’ equity and interests.