Sample Document for Practical Training Report

Multimedia University – Faculty of Business and Law Practical Training Report

Abstract

First of all, so thankful and appreciates to the Faculty of Business and Law,

Multimedia University had endeavored for us the opportunity to further our skills in the

industrial training section 2006/2007.

Undoubtedly, I had gained some basics of working experience as well as social

skills during my recent training life. Before I stepped into the industry, fear and excited

emotion was just unavoidable. But once I stepped into the company, my goodness, I had

totally no time to scare or whatever. This was because the beginning of my training life

was extremely busy. That time was the peak period of tax submission for personal and

sole proprietors.

I was engaged in auditing, personal and company taxation and accounting as well

during my training period. Secretarial works was lesser than the three mentioned above.

At the beginning of training period, I was engaged mostly in taxation for personal and

sole proprietors. It was the first time to fill in Form B, it was just excited. By the way, I

had to be very careful while filing the Form. After the death line for tax submission for

personal and sole proprietors, it was the time to engage in auditing works. The audit

procedure included reviewing the company’s system of bookkeeping, accounting and

internal control, making such tests and enquires as they consider necessary for the

purpose of their audit, for instance, these tests will apply to the verification of assets and

liabilities. The audit work must be carrying with cautious. Any fraud or careless will

cause the final audit report void.

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After the six months of practical training, I get to realize the meaning of

“knowledge began of practice”. It was the most memorable period of my life.

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Introduction

Multimedia University (MMU) is my dream university since I get to know its

existence. It is the first Government-approved private university in Malaysia. It plays an

important role in providing world class education within the abroad sphere of

telecommunications, multimedia, computers, digital art, animation, information

technology, software development, and management.

For accounting major in MMU, the syllabus is broad and complete. At the mean

time, besides our core subjects, we have to study as well as marketing, finance, business

information, information technology and a few to name. Accounting major in MMU is

recognized as professional by MIA (Malaysian Institute of Accountant) and as well as

industry.

Since our qualification is recognized by MIA, we have to undergo 26 weeks of

practical training in terms to complete our syllabus. By the way, we have to apply an

audit firm which recognized by MIA or accounting department of commercial and

government agencies which supervised by MIA.

I have been applied as a trainee in Foo & Company which located at 15-1A,

Jalan Kesidang 3/11, Melaka Mall, 75300 Melaka. Foo & Company was set up in the

year 1998. Foo & Management Consultancy and Foo & Co Tax Services was set up

after Foo & Company. Foo & Company is the audit department that provides

professional audit services to clients. Foo & Management Consultancy is the accounting

and secretarial departments. Meanwhile, Foo & Co Tax Services is the tax department

that provides taxation services.

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The firm currently provides auditing, accounting, secretarial and taxation

services to more than 300 companies including private limited and limited company.

Their business in nature included trading, property and development, education,

manufacturing and many mores.

My practical training was started from 19th September 2006 to 15th December

2006. My scope of training in Foo & Company included auditing, taxation, accounting,

bookkeeping, and secretarial. I was under the supervision of Mr. Lim Ban Chow during

the sixth months training.

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ORGANIZATION CHART OF FOO & COMPANY

Diagram 1: Organization Chart

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PrincipleFoo Kok Lim

SupervisorLim Ban Chow

SupervisorLim Ban Chow

SupervisorFoo Seow Chin

Foo & Co. Foo & Co. Tax Services

Foo Mgt.Consultancy

AdministratorChu Hun Lian Trainees

Sharon LeeSe Sian HooTee Ee Voon

Senior StaffHairulnizam

(Jasin Branch)


Full Report

Taxation works and accounting works

My practical training was started on 19th June 2006. I reached office punctually

during the first day of my training. The works assigned to me during the beginning of

training was taxation works. I was required to compute the partnership account and tax

payable of YSL Industrial & Supply Enterprise from year 2002 to 2004. This was a

difficult task for me since the partnership situation for YSL was quite complicated. After

finishing prepared the profit & loss accounts and balance sheets, I passed my work to the

senior colleague to proceed with tax computation.

In general, workloads in Foo & Company were heavy from the beginning until

the end of my practical training. During the first month of practical training, my overall

scopes of works were covered by taxation. From taxation for partnership, sole

proprietors to personal, I had to prepare the balance sheet, profit & loss account, notes to

the accounts, capital allowances, and finally the tax computation. After the tax

computation, I was required to fill in the Form B by referring to the above accounts. I

will pass my work to the senior colleague for examination each time a task was

completed. Besides taxation work, I was started to enter monthly accounting transactions

for Milik Sinar Sdn. Bhd. (kindergarten) by using UBS accounting system. Fortunately I

used to learn UBS system before in our course syllabus, I just recalled what I have learnt

and applied it into my work. Year end processing, bank reconciliation all can be done by

using UBS accounting system. It is easier and save our precious time by using UBS

accounting system.

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Auditing works

I was started auditing works during my third week of industrial training. At the

beginning I was in charged to carry out dormant company audit. I was given previous

year audit report, working paper and relevant documents. I had to read all these previous

documents before start to audit. Hence, I understand how the documents and audit

working papers are organized and kept through these activities. Normally, for each

client, there are three types of files to keep the relevant documents and working papers.

There are permanent audit file, current audit file and taxation file. The permanent audit

file is used to keep the audit reports, sales and purchase agreement, tenancy agreement,

bank facility agreement and Memorandum and Article of Association. Current audit file

contains all the audit working papers that have been done for the previous year. The

copy of audited financial statement, tax return forms, tax computations, and worksheets

will be kept in taxation file. All these files are kept properly in pre-numbered pigeon hall

to be retrieved easily once needed.

The Process of Providing Audit and Tax Services to Clients

The audit services starts when the documents have been received from clients.

For instance, we would receive management accounts such as balance sheet, profit and

loss, and trial balance. Besides management accounts, general ledgers, payment

vouchers, bank statements, official receipts, invoices and sort of documents will be

receive together with management accounts for audit purpose. Once the above

documents received, the first thing we need to do is to acknowledge the documents by

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listed out and keep the documents in appropriate place. The acknowledgement of

documents with a list will be given to supervisor to assign audit works to staff. When the

staff receives the acknowledgement of documents from supervisor, all the relevant

documents to perform an audit have to retrieve.

Before performing an audit, we need to check closing balances of the balance

sheet items from last year working papers. After that compare to the opening balances of

balance sheet items in client’s general ledger. This step is necessary to ensure that clients

have made adjustments to their accounts based on previous year audit adjustments done

by audit staff. After that, we can start to perform all necessary audit procedures in order

to draw a conclusion on the true and fair view of the financial statements prepared by

clients. If we are appointed by client to be the tax agent of that particular company, we

have to prepare tax computations together with worksheets after all the audit procedures

completed.

Next, audit staff will prepare confirmation letter, letter of representation and draft

audited financial report. After that, audit staff will finalize all the working papers and

double checking the typing errors of drafted financial report. The drafted report together

with all the relevant documents will pass to supervisor for review. Audit staff needs to

clear review points, if there are any inquiries asked by the supervisor after reviewing all

the working papers. The final audited financial statements will be printed out after

supervisor have ensured and conformed that there are free of misstatements and errors

on the drafted report. All copies of financial reports must be signed by directors before

the signature by auditor. Therefore, tax return forms and worksheets can be filled up

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based on the audited financial report. After the tax return forms signed by tax agent and

director of the company, it will be submit to Inland Revenue Board (IRB). After audit

and taxation services completed, the completeness of client’s documents have to double

check before it returned back to client.

Auditing of Dormant Company

During the third week of training, I have been assigned to perform audit on

dormant companies. Dormant companies refer to those companies which never

commence business since the date of incorporation or those companies which have

ceased their business. Hence, the process of auditing of dormant company is less

complicated as compare to auditing an active company because some of audit

procedures like audit of trade receivable and inventories are not applicable on that basis.

Therefore, performing audit on dormant company enable us to understand the basic audit

procedures for auditing a company.

a) Auditing of Income Statement Items

Normally there is no income generated by dormant company since there is no

activity based on generating income. As such, audit procedures for auditing revenue or

turnover are not applicable. However, some of the expenses like audit and secretarial

fees cannot be avoided even though the company does not have any operations during

the financial year. For dormant company, usually there is no trial balance prepared by

client for the purpose of audit. Therefore, before we start audit, we have to prepare

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journal entries to take up audit and secretarial fees for current year based on debtor

records provided by audit firm and secretarial firm. For example, the journal entries to

take up the current year audit fees are debit audit fee account and credit accruals

account.

For a newly incorporated company, preliminary expenses are unavoidable. These

expenses are normally charged by secretarial firm for providing services on the

formation of a new company. Usually, the formation expenses for newly incorporated

company are around RM 2000. Since there are only a few types of expenses and amount

of each type of expenses incurred was not material, therefore, the audit procedure for

auditing expenses is to check for correct classification of expenses. Other audit

procedures like test wages or salaries to underlying records would not be applicable.

b) Auditing of Balance Sheet Items

The most common balance sheet items that occurred in the balance sheet of

dormant company are accruals, amount owing to directors, share capital and

accumulated loss accounts.

The accruals account usually consists of audit fees and secretarial fees that have

not been paid after the services have been provided. On the other hand, amount owing to

directors resulting from payment made by directors on behalf of the company. In

auditing of accruals account, the audit procedure such as check for possible omissions

are performed by checking service invoice after the year end and inquire whether such

services already provided before year end. In terms of amount owing to directors, we

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need to check the movement of balances during the year for ensuring any increase is

actual liabilities. Thereafter, we need to obtain confirmation for that balances.

For a company to be incorporate, the paid- up share capital must have at least

RM2. In auditing of share capital, we need to check statutory records whether there is

any increase in both authorized and paid up share capital.

Auditing of Investment Holding Company and Active Company

After finished audited few dormant companies, I was assigned to carry out few

active companies audit. These included manufacturing, trading, and service providing

companies.

a) Auditing of Income Statement Items

i) Revenue or Turnover

Revenue or turnover for companies may include sales income, service income,

rental income, management fees and other types of income depend on the activities of

the particular companies. Before the exact audit perform start, all the invoices and

vouchers sent by clients will be vouch by one of the staff. After all the vouchers and

invoices finished vouched, another staff who in charge in audit will start to prepare the

audit works. These can be classified as sales cut off test and sales test. The purpose of

doing sales cut off test is to ensure the sales recorded in general ledger was incurred

within the accounting period. Normally, the last five sales invoices for the particular

accounting period and the first five sales invoices after that particular accounting period

will be found out. After that, we will check general ledger to make sure the last five

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sales invoices for the particular accounting period have been recorded in ledger and the

first five sales invoices after that particular accounting period are omitted from ledger. In

terms of sales test, first of all we need to randomly select few months’ sales depend on

sales volume of that company. If the volume of sales of that company is small, normally

two months’ sales will be selected. However, if the volume of sales is large, normally

three or four months’ sales will be selected for doing sales test. The next step is to trace

from sale invoices to the general ledger for checking possible errors on invoice date,

amount, and pre-numbered sequence and trace from general ledger to sales invoice for

test of omission. In addition, we need to trace material amount in general ledger to

individual debtor account for checking whether the sales have been correctly posted to

individual debtor account. Moreover, a sample of credit notes to sales return is needed to

be checked and make sure credit note have been properly authorized. After the sales test

have been done, we are able to draw a conclusion on the reliability of accounting system

for recording sales transactions based on the sample of sales that we have tested.

Rental income is normally generated by letting out the property held by

company. For rental income, we need to check the tenancy agreement to ensure all

income was correctly taken up during the financial year. If the rental income received is

not tally with rental income prescribed in the tenancy agreement, there may be a rental

receivable or an advanced receipt of rental. Therefore, relevant adjustment must be done

to ensure rental income show in income statement is tally with amount prescribed in

tenancy agreement.

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Interest income is usually generated from the fixed deposits put in bank. In case

of interest income, we need to check fixed deposit balances and maturity dates to ensure

all interest income was correctly taken up. During course of audit, if there are fixed

deposits appear in balance sheet but no interest income shown in income statement

prepared by client, there must be the omission of interest income. Therefore, we have to

take up interest income according to the interest rate and maturity date stated on the

fixed deposit slip issued by bank.

After the audit procedures for auditing revenue have been done, we need to draw

a conclusion on whether the revenue has been fairly stated in the financial statements.

ii) Purchases and Expenses

Purchases test are needed to be performed in order to audit purchases. The

objective of performing purchases test is to determine whether accounting system of

client was reliable in recording purchase transactions and individual trade creditor

accounts. Like the sales test, we also select two or three months purchases as sample for

performing purchases test. Next, we trace from purchase invoice to general ledger for

checking the possible errors on invoice date and amount. Furthermore, we also trace

from general ledger to purchase invoice for test of omission. Besides, we need to trace

material amount in general ledger to individual creditor account for checking whether

purchases have been posted correctly to individual account.

Besides purchases, companies would incur different types of expenses in the

course of running business. In auditing of expenses of companies, analysis of expenses

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will be performed to check whether expenses were correctly taken up. This activity is

done by selecting the expenses accounts which amount is considered to be material and

vouched those expenses to invoice or other supporting documents of expenses for

checking correct classification of account. Repair and renewals expenses on capital

items are always needed to be analyzed because some of the material expenses are

capital in nature. As such we need to capitalize those expenses which are capital in

nature as fixed assets and provide depreciation charge accordingly. Examples for

expenses which are capital in nature include renovation for building, electrical

installation, replacing new machine. For tax purposes, analysis of expenses would help

to detect expenses which are not deductible against business income. Therefore,

expenses like traveling, rental, commission, entertainment, advertisement are always

needed to be checked whether any private expenses are contained in those expenses. For

rental expenses, monthly rental, name of landlord and address of property rented must be

stated in working papers.

b) Auditing of Balance Sheet Items

i) Auditing of Current Assets

Besides non-current assets, we have to audit current assets like inventories for

most of the trading and manufacturing. Stock take would be carried out to review count

procedure planned by client and determine whether the procedures provided adequate

steps to avoid miscounting. Furthermore, we should test count items from stock sheets to

physical stocks and vice versa to ensure counting and recording are reliable cum

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accurate. In addition, test check casting and extension would be done in order to check

arithmetic accuracy. Besides, stock sheet checking is done to ensure that the value of

stocks is not amended after physical count has been done. We need to note any

damaged, obsolete, and slow moving items and obtain opinion from directors whether

such items needed to be written-off. Moreover, cut-off test should to be carried out. We

have to check last few goods receipt notes to purchase invoices, if goods are received

and purchase invoices are recorded after the year end, an adjustment must be made on

trade creditors. Also, we need to check the last few consignment notes to sales invoices,

if goods were delivered but invoices was recorded after the year end, adjustments should

be made to sales or inventories. Test check to purchase invoices is needed to be

performed for ensure whether costs stated in the stock sheet are reliable. Finally, we

would perform test check to sales invoice to establish net realizable value, and inventory

should be stated at the lower of cost and net realizable value.

For debtors and prepayments, several procedures should be performed in order to

ensure the existence of debtors and prepayments. In terms of trade debtors, control

account should be reviewed or prepared for checking whether the balance in trade

debtors control account agree to total of debtors list. Next, we proceed to check the list

of trade debtors for ensuring each debtor are made up of specific balance and there are

no debtors listed without name. When the number of debtors is small, we are able to

check receipts after year end to verify whether the debts are good. If most of the debtors

paid after the year end, no further audit works are needed to be done. For the debtors

who have credit balances, we should check whether there are any book keeping errors

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(receipts have been posted to wrong debtors account) and cut-off errors (invoices not yet

issued but payment have been received). If these errors occurred, then adjustment on

debtors account should be made. In terms of prepayments, we need to check if the

prepayments are normal to the company operation. Furthermore, prepayment without

movement should be checked for reasonableness. For example, it is reasonable for no

movement on deposits for rental and electricity.

During the course of audit, several audit procedures on bank and cash balances

need to be done to ensure these balances were fairly stated in financial statement. For

bank balances, normally we need to obtain bank statements to verify the balances in

client’s general ledger. If there is any term loan or overdraft facility, bank confirmation

should be obtained because it reveals information such as the nature of securities

pledged to the bank and limit of borrowing that are necessary for disclosure in financial

statement. In addition, bank reconciliation must be reviewed or prepared in order to

agree book balances to bank confirmation. Any error or omission other than outstanding

cheques and uncredited lodgements in bank reconciliation would be subject to

adjustment. Furthermore, we need to check clearance of cheque and any uncleared item

after the balance sheet date to determine whether reclassifications to debtors and

creditors are necessary. For cash balances, cash count should be done if the amount of

cash balance is large. We need to ensure that physical cash balance is equal to book

balance because sometimes omission such as petty cash payment have been made but

not recorded in cash book. In case cash count is not carried out, cash certificate should

be obtained from clients.

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i i ) Audit of Non-current Assets

There are many types of non-current assets for a company. There includes

freehold land or building, office equipment, furniture and fitting, plant and machinery,

and investment. In order to carry out audit work for non-current assets, firstly, we need

to obtain fixed assets register and prepare movement schedule which would show any

addition and disposal of assets during the financial year. In case there are any material

additions, we need to vouch those additions to ensure cost was correctly taken up with

correct classification. Therefore, the invoices would belong to company. Furthermore,

physical verification would be also considered if the value of plant and equipment and

addition during the year are material. In addition, we need to review repair and renewals

expenses for any capital items. Before capitalizing the expenses, we have to consider the

materiality. For any disposal of assets, we need to vouch sales proceeds to cash book or

bank statement. In addition, we need to check gain or loss on disposal of assets and

therefore prepare a schedule for fixed assets disposal. Moreover, adequacies of

depreciation charge for assets have to be reviewed as well. Depreciation charge reflects

the useful life of the assets and it is consistent from year to year for the particular asset.

Lastly, inquire the company’s director is there any need for impairment or revaluation of

assets for the particular financial year. If there was any impairment or revaluation of

assets, schedule must be prepared to ensure future reversal of impairment was treated

treated.

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iii) Auditing of Current Liabilities

The objectives of performing audit procedures on creditors and accruals are to

ensure creditors were not understated and probable liability was provided for. In terms

of trade creditors, we should review the trade creditors control account to ensure the

balance in control account is tally with total list of creditors. Any difference between the

balance in control account and total list of creditors may indicate omission of records.

Besides, list of trade creditors need to be reviewed to ensure that each creditor

was made up of specific balances. When we trace from list of creditors to supplier

statement, difference may occur due to over or under statement of liabilities, as such we

should investigate the difference and make adjustment if the differences are material.

For creditors who have debit balance, we should check whether there are book keeping

errors and cut-off errors. Debit balances which arise due to advance payments made may

need to be reclassified to debtors if the amount is material. In addition, we should check

for possible omission of trade payable. For example, names of creditors appearing in last

year’s list and not in this year’s list may indicate possible omissions.

For accruals such as accrued salaries, rental and telephone charges, we should

check possible omissions if those accruals are considered material. Possible omissions of

accruals can be detected by checking service invoice after the year end and determine

whether such services already provided before year end. For accrual without movement,

we can obtain directors’ opinion for need to written off those accruals.

In terms of other creditors such as amount owing to directors and amount owing

to holding company, we need to seek confirmation from related parties and loan

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creditors. Besides, we need to check movement of balances of other creditors to ensure

any increase is actual liabilities.

For companies acquire assets through hire purchase, there would be hire

purchase creditors. As such we should obtain hire purchase agreement to ensure that

agreements are in the name of company. Furthermore, prepare a standard schedule on

balances and interest charge on hire purchases. For any new hire purchase, we need to

ensure amount capitalized in financial statement was correct. Normally, amount

capitalized should exclude interest charge, road tax and insurance for motor vehicles.

The estimate of fair value of hire-purchases should be obtained from the director.

iv) Auditing of Share Capital

In auditing share capital, any increase in share capital must be referring to

statutory records for any resolution approving increase in share capital. Increase in share

capital is only finalized when Form 24 (Return of allotment of shares) has been filed

with ROC and share certificates have been issued. However, in cases of authorized share

capital, Form 28 (Notice of Increase in share capital) must be filed and Memorandum

and Articles of Association must be amended accordingly. The proceeds resulting from

increase of share capital can be in the form of cash or non-cash item such as asset

injected to company. Therefore, we need to ensure that the proceeds from share issued

are agreed to cash book or assets introduced.

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Statutory Records Audit

The objective of statutory records audit is to ensure that the company’s statutory

books are recorded and kept properly in accordance with Company Act 1956. Statutory

books include register of members, register of directors, managers and secretaries,

register of debenture holders, register of directors’ shareholding, debentures and interest,

register of charges, and minutes book. Several procedures are performed on statutory

records audit before we can conclude that the company keeps all the statutory records in

accordance with law.

Companies are required to lodge with Registrar of Companies (ROC) an annual

return together with audited accounts within one month after date of Annual General

Meetings (AGM). Normally, AGM is held once every calendar year within 15 months

from the date of preceding AGM. However, newly incorporated company is allowed to

hold first AGM within 18 months from the date of incorporation. For audit purposes, we

will obtain the latest copy of annual return and inspect the filing receipts of annual

return.

Next, we will proceed to check statutory books for ensuring all information and

details recorded are up to date. In register of members, the particulars include names and

addresses of members, number of share held by members, amount paid on shares date at

which the person register as member and sort of. For register of members, we need to

check share issued at date of last annual return agree with latest annual return provided

that the company did not issue any new share. If there was any transfer of shares

between members, we need to check share issued and transfers since the date of last

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annual return are properly recorded. Furthermore, a copy of Form 32A (Form of

Transfer of Securities) and resolution should be obtained in order to prove the process of

transfer of shares is complied with law. For the company which issued new shares, we

need to ensure Form 24 (Return of Allotment of Shares) is filed and check minutes and

resolutions for approval to issue new shares. Lastly, we must check to ensure the number

of shares in issue agree to paid-up share capital.

In register of charge, there must be a short description of property charged, the

amount of the charge, and names of the persons entitled to the charge. If there was no

any creation of new charges or discharge of charges, the particulars of charges at date of

last annual return must agree to latest annual return. We need to check Form 40

(Registration of charge) and resolutions if there was creation of new charges. In cases of

discharge of charges, we need to ensure Form 41 (Satisfaction of charge) has been filed

to ROC.

The register of directors, managers and secretaries shall specify their present full

name, Identity card number, residential address, date of birth, business occupation and

date of appointment, removal, and resignation. First, we have to check particulars of

directors, managers, secretaries as at date of last annual return agree with latest annual

return if there was no appointment or resignation of directors, managers and secretaries.

For appointment and resignation of directors, managers, and secretaries, we need to

check if the register books have been updated since the date of last annual return.

Furthermore, we have to check Form 48A (Statutory Declaration before appointment as

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a director) for appointment of directors. Lastly, we need to check resolutions regarding

the appointment and resignation of directors, managers and secretaries.

A company must keep a register of directors’ shareholding showing the

particulars of directors’ shares in the company or in related corporation. Normally, we

have to check to ensure the changes in directors’ shareholdings are properly recorded. If

there were no any changes relating to the directors’ shareholding, we need to ensure that

directors’ shareholding as at date of last annual return agree with the latest annual return.

Besides register books, a company must also keep all minutes of proceedings at

general meetings, board meetings and management meetings in minutes books within 14

days of the meetings. For audit purposes, we need to check resolutions kept in minutes

book for significant or material item which need to be reported in directors’ report or

financial statement. Furthermore, it is important for us to examine resolutions

subsequent to the balance sheet for any subsequent events that will affect fair

presentation of the current period financial statement. For subsequence events that have

direct effect on current period financial statement, adjustments to financial statements

are required. However, if the subsequent events have indirect effect on financial

statement, only disclosure in financial statements would be required.

During the course of statutory records audit, I was exposed to different statutory

requirements that need to be complied by companies registered under ROC. Hence,

performing statutory records audit can provide us a better understanding about the

company secretarial practice in Malaysia.

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Draft Audited Financial Statement Report

Once accumulation of final evidence and evaluated results of audit completed,

audited financial statements will be draft. The audited financial statements should

consist directors’ report, statement by directors, statutory declaration, report of the

independent auditors and financial statements.

Information contained in directors’ report include principal activities of

company, financial results of company, name of directors who held office during the

period, directors’ benefits, directors’ interests in shares and debentures, dividend

declared or paid during the year, issue of share and share option, statutory information

on the financial statement. In statement by directors and statutory declaration, directors

will state their opinion on the true and fair view of the state of affair of the company, and

declare that they are responsible to the financial management of company.

Report of independent auditor would be issued at the end of audit process. In

audit report, auditors will state that the opinion on whether the financial statements have

been prepared in accordance with approved financial reporting standards and whether

the financial statements give a true and fair view of state of affair of company.

Normally, standard unqualified audit report will be issued if auditors are able to

conclude that the financial statements give a true and fair view and are prepared in

accordance with approved financial reporting standards. Sometimes, auditors would

issue unqualified audit report with explanatory paragraph when the financial statement

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present true and fair view but auditor believe that it is important or required to provide

additional information. In the cases that auditor are able to conclude that financial

statement present a true and fair view but the scope of the audit has been materially

restricted or the approved financial reporting standards were not followed in preparing

financial statements, qualified audit report would be issued. Adverse or disclaimer

opinion would be formed by auditors when financial statements do not present a true and

fair view or auditors are not able to form opinion on whether financial statements

present a true and fair view.

MASB 1 “Presentation of Financial Statement” requires companies to prepare

balance sheet, income statement, statement of change in equity, and cash flow statement

together with notes to financial statements. Notes to financial statements normally

contain accounting policies used for preparing financial statement, and important notes

to explain items in balance sheet and income statement. In balance sheet, items are

normally presented in non-current and current position. Property, plant and equipment

and investments are classified as non-current assets in balance sheet. The accounting

policies for property, plant and equipment, and investment are required to be disclosed

in note to financial statements. For property, plant, and equipment, the accounting

policies stated include the measurement bases of value, depreciation method, and useful

life or depreciate rate. The accompanying notes for property, plant and equipment would

provided the reconciliation of carrying amount at beginning and end of the period for

each type of fixed assets. In addition, Companies are required to disclose separately the

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carrying amount of freehold land and building. Furthermore, a note to clarify assets

which have been pledged as securities should be disclosed.

Current assets in balance sheet include inventories, trade receivables and bank

and cash balances, deposit and prepayment. For inventories, the accounting policies in

relation to measurement of inventories (cost or net realizable value) and cost formula

(FIFO, LIFO, and Weighted Average) are disclosed in financial. In the accompanying

notes, inventories are sub-classified into raw material, work-in-progress and finished

goods. In addition, the amount of any inventory pledged as securities for borrowing

should also be disclosed in financial statements. In terms of trade receivables, the

accounting policies regarding basis of measurement and recognition as well as basis for

write off of bad debts are disclosed. Normally, receivable are stated in anticipated

realizable value, and bad debt are written off when identified. The accompanying note

for trade receivable would show the carrying amount after deduction of doubtful debt

and also state the credit terms for trade receivable. For bank and cash balances, the

accounting policies about what comprises cash and cash equivalent in cash flow

statement are shown in note to financial statement. The accompanying note would

segregate fixed deposit from bank and cash balance. Besides, the average interest and

average maturity period of fixed deposits and amount of fixed deposit pledged as

security also need to be disclosed in notes to financial statements.

Current liabilities in balance sheet include trade payable, advance receipt, hire-

purchase payables, interest bearing borrowings and tax payable. In terms of trade

creditors, the accompanying note to financial statements would show the current

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exposure profile and credit term of trade creditors. For hire-purchases payables, note to

financial statements would disclose current and non-current portion as well as the

average effective interest rate of hire-purchases payables. The non-current portion of

hire- purchase payable would be shown under non-current liabilities. In case of interest

bearing borrowings, the accounting policies stated include basis of measurement and

recognition. The accompanying note for interest bearing borrowings would show

separately the bank overdraft, trade facilities and term loans. For term loans, rate of

interest, nature of security and repayment term should be disclosed. Furthermore,

interest bearing borrowings are divided into current and non-current portion, and non-

current portion would be shown under non-current liabilities.

Capital and reserve in balance sheet include share capital and retained profits.

For share capital, authorized share capital and nominal value of various classes of share

are disclosed in notes to financial statements. In addition, issued and paid-up share

capital together with nominal value also needs to be disclosed. Furthermore, disclosure

of balances at beginning and end of period are also required if there are any increase in

share capital.

The income statement of companies would give a picture on the company’s

financial results. This statement was prepared by deducting all expenses from the total

income. Gross profit would arrive by deducting the cost of good sold from revenue. In

note to financial statement, accounting policies on revenue recognition should be

disclosed. In addition, if there is more than one significant category of revenue, amount

for each category should be disclosed in notes to financial statements. Furthermore,

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disclosure of cost for each category of revenue is needed if revenue has been classified

into different categories. Other operating income would be added to gross profit and

administration expenses as well as other operating expenses are deducted from gross

profit in arriving profit from operation. In notes to financial statements, what income

makes up of other operating income would be disclosed. Moreover, items that have been

charged or credited in arriving at profit from operation are also needed to be disclosed in

notes to financial statement. Finance costs would then be deducted from profit from

operation in arriving profit before tax. If the finance costs is different to amount charged

under finance cost, a reconciliation of total finance costs are required to be disclosed in

notes to financial statements. After that, tax expense would be deducted from profit

before tax in arriving net profit for the year. In notes to financial statements, components

of tax expense may include current tax expenses, amount of deferred tax expense

relating to the origination and reversal of temporary differences. In addition, a numerical

reconciliation between tax expenses and the product of accounting profit multiplied by

the applicable tax rate would be disclosed to explain the relationship between tax

expense and profit before tax.

Statement of changes in equity in financial statements would show reconciliation

on the total equity at the beginning of period and end of period. Increase on paid-up

share capital, net profit or loss for the year and dividend declared will cause the

movement on the total equity.

MASB 5 “Cash Flow Statement” requires companies to prepare and present cash

flow statement in the financial statements. Cash flow statement will disclose the inflow

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and outflow of cash and cash equivalents of a company from its operating, investing,

and financing activity. Cash flows from operating activities normally include cash

receipts from customers, cash paid to suppliers and employees, interest paid as well as

income tax paid. Cash flows from investing activities are those cash flows in relation to

acquisition and disposal of long term assets such as plant and equipment, and investment

in quoted share. The cash flows from financing activities includes those cash flows

relating to obtaining and repaying of financial resources from owners and other

providers of long-term capital.

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Presentation of work done

Audit works

Anglo Treasure Sdn. Bhd. Dormant company.Honiwell Enterprise Sdn. Bhd. Dormant company.Soon Hock Electrical Engineering Works Sdn. Bhd.

Dealing in electrical engineering works.

Woon Hoe Kan & Sons Sdn. Bhd. Dormant company.Semarak Hardware Trading Sdn. Bhd. Dealing in hardwares trading business.Bee Heng Chan (Malacca) Sdn. Bhd. Dealing in furniture business.Shin Lek Steel Sdn. Bhd. Dealing in steel business. Uprima Sdn. Bhd Dormant company.Lambang Cekap Cleaning Services Sdn. Bhd.

Rendered cleaning services to customers.

British Domain Sdn. Bhd Dealing in management works.Milik Sinar Sdn. Bhd Provides preschool education.Pelangi Cempaka Sdn. Bhd. Dormant company.Gemilang Ritma Sdn. Bhd. Dormant company.Pay Fong High School, Malacca. Provides secondary education.Chin & Yau Advocates And Solicitors. Rendered legal consultancy services.

Table 1.1: Presentation of work done

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Discussion on Findings and Results

Really appreciated to MMU that delivered us the opportunity to carry out these

sixth months practical training. It was a sweet and sour memory in my lifetime. All this

while I have been learnt to be independent and more understand what exactly

“trustworthy” meant. Beside internal works like auditing, taxation, accounting and

secretarial, interactions with clients is essential. In order to retain clients, despite of

professional knowledge, at the mean time we have to prove that we are effective and

efficient.

In this new era of technology, accountants have to enhance themselves in order

to compete with others. Besides accountancy knowledge, we should possess knowledge

of finance, economics, marketing, information technology, business strategies, current

issues and a few to name. Today, accountant is no more only accountant, an accountant

can be the financial planner, financial consultant, financial controller, auditor, tax agent,

CEO, CFO and so on. The works of accountants was not limited as last time, it is broad

than enough nowadays.

Nevertheless, we have to meet our clients almost daily. The public relations

skills do important for an accountant. In order to present our work perfectly, we have to

learn the presentation skills from time to time. To be a professional, tension and high

pressure is inevitable, especially auditors. Pressures imposed from the upper level,

clients, and environment. There are many ways for us to release tension; just we need to

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find space time to figure it out. Frankly, accountants sometimes have to be a high EQ

person.

Time is precious to every accountant, auditor and tax agent. Report or work done

must be send to clients or other bodies on time. We have to be punctual as our promised.

Late submit of documents will arise problems such as penalty imposed to clients. As a

result, we have to take cautious from time to time.

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Conclusion and Recommendations

Throughout these sixth months of industrial training in Foo & Company, I really

grown up and gained dozens of knowledge. I was so thankful to Mr. Foo Kok Lim, the

director of this company. He gave me the chance to complete my industrial training in

Foo & Company. Besides, I would like to say thankful to my supervisor’s guidance

during these sixth months period. He has enlightened me always on my assignments

indeed.

The most honorable and great thing I had done in year 2006 was completed sixth

months of industrial training. The workloads were extremely heavy during this period. I

tried my best to adapt the working environment as I never touch before. I still remember

when the last day of my training, such complicated was my emotion. Tiredness,

sentimental was my feelings for that moment.

I would say that it is vital for accounting students to conduct industrial training.

The benefits were a lot, the most meaningful and valuable point is practical training

really an advantage to us and it really helps us a lot to face the future challenges. “All

genuine knowledge originates in direct experience”. This sentence reflects and

represents the conclusion of my practical training.

Although the journey to be a professional and qualifier is arduous, I will still

walk until the end of the road because I convinced with myself that this sixth months

training expose me to the more challenging business world.

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Sample Document for Practical Training Report

Documents

multimedia university faculty

interest bearing borrowings

practical training report

permanent audit file

latest annual return

newly incorporated company

individual debtor account

ubs accounting system