Chicken Run Case Study: En Selamat Essay

1. Encik Selamat- General manager of Excel poultry & meat Sdn Bhd 2.

Encik Kassim- Manage the finance & marketing3. Mr Choy- Credit Controller4. Encik Azman- Executive director of Cold Gold Sdn Bhd (debtor) 5. Puan Azura- Account Executive6. Mr Siva- Retail customer7. Encik Munir- Former staff at finance departmentIssue:1.

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Late 2008, operating cash running low.2. Significant increase in short term borrowing.?Increase financial obligation (interest payment).3. Credit limit of Cold Gold Sdn Bhd had gone into its level and yet the marketing department continued to supply product to them.?Operating loss ? exorbitant price of chicken feed.

* Cold Gold had been asked to pay part of the payment.?Best friend ? issue on professionalism here….4. The figures on statement of account not tie up with balance in account (debtor balace).?Encik Munir not disclosed the receipt of payment from customer. ? Issue on internal control?Fraud: Manipulation? Mislead?Criteria:1.

Problems2. Specify key assumptions3. Identify relevant info and sources to solve the problem 4. Evidence and quality of evidence5. Qualitative and quantitative tools6. Conclusions, implications and consequencesKey assumptions1. En Munir had conducted cash skimming in the company which leaded to his resignation. 2.

En Selamat has personal benefit from the deal with Cold Gold Sdn Bhd. Therefore although CG did not pay within the credit term, En Selamat did not stop the marketing department to continue supply products to the company. 3. There is possibility that the irregularities in the account balances is due to illegal transferring of a particular debtor’s balances to another debtor.1. Financial* Cash flow not liquid.* Financial ratio analysis.

* Apply for short term borrowings from bank and financial assistance ? Skim Pembiayaan Perniagaan MARA, TEKUN.* To increase sales (new market, fully utilized=sell chicken poop and bulu ayam) ? not only sell the meats.1. Meats 2. Eggs 3. Fertilizer (poop) 4. Livestock (sell the chicks/breeds to other farmer) 5. Feathers* Improve marketing ? use En Selamat’s skill in marketing.

* Send reminder to debtor.* Give good credit term.* Cut cost ? feed and labour expenses (hire relative).2. Leadership* Autocratic ? laissez faire.

* Recommendation: democratic.3. Conflict of Interest* En Selamat and En Azman (“personally benefit from the deal”).* En Selamat and BOD.Recommendations:* Establish a clear set of policies and procedures within the company.* Develop a whistle blowing policy.

* Ensure the independency of the management team.* Conduct internal audit or investigation activities.* Ms Choy: To persuade BOD that the issues in the company can lead to a deterioration of the company’s performance, esp.

financially. 4. Internal control* EncikSelamat? had responded to unrelated tasks to him.? approved the credit limit of CG without Ms.

Choy’s authorization. ? access to Ms. Choy information system.* En. Munir ? had not disclosed the receipt of payments from customer and the matter was pending investigation.

? Left the company after committing fraud.* Possible of fraud ? Encik Selamat (has power, BOD support and benefited from connection with En. Azman). * Account balance not tied up ? may be due to Pn Azura’s carelessness.

In which this encourages fraud to happen in the company.


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