Kawan Food Bhd

&
Its Environment
Nature of Business:
nature geo product
Profile of Directors:
 Sub- Committee: Audit Committee

Chairman
(Lim Pang Tun)

Member Member
(Chen Seng Chong) ( Soo Yoke Mun)
 Sub- Committee: Remuneration Committee

Chairman
(Gan Thiam Hock)

Member Member
( Lim Pang Tun) (Chen Seng Chong)
 Sub- Committee: Nominating Committee

Chairman
(Chen Seng Chong)

Member Member
( Lim Pang Tun) (Nareshchandra)
Major Shareholder:
Percentage of
Major Shareholder Number of shares Relationship to directors
shares (%)
Gan Thiam Chai 59,939,991 32.78 Executive Chairman
Goshenite Limited 43,200,000 23.62 NIL

Non- Independent Executive

Gan Thiam Hock 15,120,000 8.27
Director

Non- Independent Executive

Kwan Sok Kay 12,420,000 6.79
Director

Niels John Madsen 6,014,250 3.29 NIL

Financial Performance:
Sales Pre-tax Profit Growth Pre- Tax Profit Margin
 Future Expansion & Financing:
Kawan Food Bhd has started to build the new factory which it is located at Selangor Halal Hub in Pulau Indah, Port
Klang. The facilities which will ready by the end of 2015 will allow individuals to merge our current operations under
one roof. Thus, the capacities will be increased, while at the same time enhancing efficiencies as well as control
apart from catering to their business growth needs. Besides that, Kawan Food Bhd had launched tortillas which
known as a kind of flatbread that has seen strong increase in demand worldwide due to its flexibility and also
simplicity to utilize.

The Group recorded sales of RM149.5 million in 2014 which represented a 18.3% increase when compared to the
previous years sales of RM126.4 million. The growth came from all the business units with export markets and the
Malaysia domestic sales being the key contributors. Profit before tax grew from RM20.6 million to RM26.3 million.
Profit after tax came in at RM20.9 million which saw an increase of 29.5% compared to 2013 (KawanFood, 2014).
 Code of Ethics
Fundamental Principles:
Professional
Professional
Integrity Objectivity Confidentiality Competence
Behaviour
& Due Care
 Code of Ethics
Threats to Independence:
Self- Self-
Advocacy Familiarity Intimidation
Interest Review
 Code of Ethics
Threats to Independence:
By accessing internal control drafted by another department in the same audit firm the firm, they might face
self- review threat where the professional accountant will not appropriately evaluate the results of a
previous judgement (MIA, 2015). Professional accountant will rely on the previous judgement from another
department when providing their current services as they are accessing their internal control system.
 Corporate Governance

Corporate governance is defined as the process and

structure to direct and manage the business affairs of the
company towards enhancing business prosperity and
corporate accountability with the ultimate objective of
realising long-term shareholder value, whilst taking into
account the interest of other stakeholders
Breaching of Recommendations in MCCG:
Financial Report Assertions:
Existence
1. Inspecting the physical inventory

assists the auditor to identify obsolete, damaged or aging inventory

Ascertaining the existence of the inventory

This includes raw materials, supplies, inventory in transit

Auditor is suggested to verify the inventory in transit by reviewing purchase invoice

2. Performing test counts

To ensure that all goods are tagged and observing that proper amounts are
shown on tags

Determining the tags and summary sheets are controlled and reconciled.

3. Undertaking substantive analytical procedures

Including computation of ratios for inventory turnover , detailed gross

margin and compared with previous periods

A lower turnover ratio suggest that some inventory items have become
obsolete
4. Confirming existence of inventory held by third parties

Inspecting documentation regarding inventory held by third parties

For instance, warehouse receipts

Financial Report Assertions:
Rights and Obligations
1. Enquiring about legal ownership of goods being shipped to entity

Ensure that the closing inventory of finished frozen goods on balance sheet are
belongs to company

2. Inspecting supporting documentation

Examine invoices to proof that the goods are belongs to the company

Review major purchase commitment agreement

3. General procedures

Including inquiry and inspection of contracts, agreements, ,minute

and similar documentation

The purpose of doing so is to find indications of liens or pledging of

inventory
Financial Report Assertions:
Completeness
1. Inspection of physical inventory

Observe counts as their clients are being done

Test counts some of the inventory

Trace their counts to the amount recorded by the companys counters

Verify that all inventory were accounted for

2. Undertake substantive analytical procedures

Incomplete inventory can be detected using this procedure such as

the ratio of sales to cost of sales to discover irregularities.

3.Make enquiries about stock held at other locations

Auditor is required to has a direct written confirmation with the

public warehouses

If inventory held at the public warehouse is significant, thus clients

procedures should be reviewed to investigate and evaluate the
warehouse
4. Performing cut off tests for purchase and sales

Including directed to the control over shipping and receiving activities

at the end of accounting period

The auditors should identify the last pre-numbered shipping and

receiving documents to determine whether the extraneous goods are
excluded
Financial Report Assertions:
Valuation and Allocation
1. Observe physical inventory

Discover any obsolete or damaged items as there are possibility realizable value of
such goods.

ISO 22000:2005 specifies requirements for a food safety management system where
an organization in the food chain needs to demonstrate its ability to control food
safety hazards in order to ensure that food is safe at the time of human
consumption.

Thus, segregating obsolete goods or discarding of those goods closer to expired

date are required in order to enhance customer satisfaction
2. Enquiring of management and scan inventory records

identify those obsolete, excess or slow-moving inventory.

3. Recalculate inventory valuation under the full absorption costing method

Ensure that the inventory flow assumption used to assign costs to inventory
are in accordance with an acceptable accounting method
4. Check subsequent sales prices and compare with cost

When inventories have become obsolete, it might be necessary to

write inventory down to a net realizable value.

5. Perform tests of pricing and summarisation

Combination of vouching, tracing and recomputation to test certain

aspects of the clients procedures.