1. Discuss the issue in the company that you chose.

A brief background of the company, who are

their directors (please list this down, how many Audit committees-outside/ independent/
expertise?, directors ( non-executive and independent) and external auditors. Which political
connection they belong to?

Issues in the Megan Media Holdings Bhd
Megan Media defaults on RM894m bank facilities :
Megan Media Holdings Bhd, which is being investigated by the Securities Commission, and its
subsidiaries have defaulted on RM893.97mil in maturing banking facilities (principal only). The
optical disk maker, which has been found to be involved in fictitious trading, said it had
defaulted on all facilities granted by its bankers. The company was unable to repay the debts due
to the constraints to its current cash flow from its manufacturing operations, it told Bursa
Malaysia late last night. Megan Medias problems are not confined to the mounting debts, but
also the fictitious transactions that might have involved more than RM500mil cash. The creditor
banks hired Ferrier Hodgson MH Sdn Bhd to conduct investigations on Megan Medias unit
Memory Tech Sdn Bhd (MTSB). The interim findings of Ferrier Hodgson show that MTSBs
suspect transactions included a RM211mil deposit paid for 13 production lines that could be
fictitious, in addition to the fictitious trading that resulted in receivables totalling RM334.3mil. It
also revealed that MTSBs assets could potentially fall short by RM456mil. Ferrier Hodgson said
the value of MTSBs fixed assets of RM585mil needed to be investigated further while the net
realisable value was unknown. The investigation discovered that the payments to all trading
creditors were actually made to other parties in a move to channel cash out of MTSB. Megan
Medias balance sheet as at Jan 31 shows that borrowings stood at RM888mil. Its receivables
grew to RM430.3mil from RM319mil a year earlier. The cash flow statement showed a negative
net cash of RM57.9mil generated from operating activities. Megan Media said it would engage
the creditor banks to formulate the debt restructuring scheme and regularization plan in ensuing
weeks. It will also initiate legal action to recover all amount lost due to the irregularities. The
statement said Megan Medias state of solvency would ultimately depend on the outcome of the
debt restructuring and regularization endeavour. However, the company pointed out that the
report on interim findings of Ferrier Hodgson indicated that it had sufficient short-term cash flow
based on its current modus operandi. It may incur a net loss of RM552mil for the fiscal third
quarter ended Jan 31 after adjustments for fictitious transactions, instead of a profit of
RM10.5mil as per the published unaudited accounts.













Brief background of Megan Media Holdings Bhd
Megan Media Holdings Bhd established in early 1994, an investment holding company provides
management consultancy services. The principles activities of the company started from
producing plastic injection components to a range of electronics and automotive parts.
Recognizing the future prospects of the data storage media industry in 1996, MMHB ventured
into the manufacturing of3.5" multi-function disk (MFD) and videotapes through its subsidiary
company MTSB. In the 1999, MTSB expanded into the manufacturing of compact disc-
recordable (CD-R) and digital versatile disc-recordable (DVD-R). It became the first Malaysian
company to receive pioneer status from the Ministry of International Trade and Industries for
manufacturing magnetic and optical data storage products. On August 8, 2000, MMHB was
listed onto the Second Board of the Kuala Lumpur Stock Exchange. MMHB's entire share capital
transferred from the Second Board to Main Board of the Exchange under the "Industrial
Products" sector with effect Tuesday, December 3, 2002. MMHB aggressive market strategy has
resulted in the company achieving a prominent footing as the largest manufacturer of CD-R and
DVD-R in the country.












Who are their directors (please list this down , how many Audit committees-outside/
independent/ expertise?, directors ( non-executive and independent) and external auditors.

Directors of the Company

Directors who served since the date of the last report are:

Dato Dr.Hj Mohd Adam Bin Che Harun
Maj. Gen. (Rtd) Datuk Nordin Bin Yusof
Redzuan Bin Abdul Rahman
Mohd Nur Ismal bin Mohd Kamal (appointed on 28 September 2007)
Datuk Rosli Bin Mat Hassan (resigned on 30 June 2007)
Yeo Wee Siong (resigned on 7 June 2007)
Alice Kuek Ai-Lee (resigned on 3 May 2007)

























Which political connection they belong to?




























Conclusion
Fraud is a major concern for organizations world-wide. It is not a matter whether your
organization is large or small or what country or industry your organization is in, as long as
humans are involved in organizations, the risk of fraud is real. We conclude that the company
(Megan Media Holdings Bhd) committing fraud. Symptom company commit fraud probably can
be seen before, during or after the year fraud happen. The composition of independent director
should play an important role in reducing the likelihood of financial statement fraud. The audit
committee members should be consists pure from independent director.