Jokes : Accountant, Engineers, Surgeons etc

  Accountant and Engineer

An Accountant and an Engineer go on a camping trip, set up their tent, and fall asleep. Some hours later, the Engineer wakes his Accountant friend.

"Look up at the sky and tell me what you see?"

The Accountant replies, "I see millions of stars."

The Engineer asks "What does that tell you?"

The Accountant ponders for a minute:
"Astronomically speaking, it tells me that there are millions of galaxies and potentially billions of planets.

Astrologically, it tells me that Saturn is in Leo. Time wise, it appears to be approximately a quarter past three.

Theologically, it's evident the Lord is all-powerful and we are small and insignificant.

Meteorologically, it seems we will have a beautiful day tomorrow.

What does it tell you?"

The Engineer friend is silent for a moment, and then speaks.
"Practically...Someone has stolen our tent".

Doctor, Chemists, Engineer

Once upon a time there lived three men: a doctor, a chemist, and an engineer. For some reason all three offended the king and were sentenced to die on the same day.

The day of the execution arrived, and the doctor was led up to the guillotine. As he strapped the doctor to the guillotine, the executioner asked, 'Head up or head down?'. 'Head up,' said the doctor. 'Blindfold or no blindfold?' 'No blindfold.' So the executioner raised the axe, and z-z-z-z-ing! Down came the blade and stopped barely an inch above the doctor's neck. 

Well, the law stated that if an execution didn't succeed the first time the prisoner had to be released, so the doctor was set free.

Then the chemist was led up to the guillotine. 'Head up or head down?' said the executioner. 'Head up.' 'Blindfold or no blindfold?' 'No blindfold.' So the executioner raised his axe, and z-z-z-z-ing! Down came the blade and stopped an inch above the chemist's neck. 

Well, the law stated that if the execution didn't succeed the first time the prisoner had to be released, so the chemist was set free.

Finally the engineer was led up to the guillotine. 'Head up or head down?' 'Head up.' 'Blindfold or no blindfold?' 'No blindfold.' So the executioner raised his axe, but before he could cut the rope, the engineer yelled out: 'WAIT! I see what the problem is!'

Surgeons discussing work

Four surgeons were taking a coffee break and were discussing their work.

The first said, "I think accountants are the easiest to operate on. 

 You open them up and everything inside is numbered."

The second said, "I think librarians are the easiest to operate on. You open them up and everything inside is in alphabetical order."

The third said, "I like to operate on electricians. You open them up and everything inside is color-coded."

The fifth surgeon says "I like engineers . They always understand when you have a few parts left over at the end."

Ok... Just one more joke.

Engineers at the urinals

Three engineers were in the bathroom standing at the urinals. The first engineer finished and walked over to the sink to wash his hands. He then proceeded to dry his hands very carefully. He used paper towel after paper towel and ensured that every single spot of water on his hands was dried. Turning to the other two engineers, he said, "At Hewlett Packard, we are trained to be extremely thorough."

The second engineer finished his task at the urinal and he proceeded to wash his hands. He used a single paper towel and made sure that he dried his hands using every available portion of the paper towel. He turned and said, "At Lockheed-Martin, not only are we trained to be extremely thorough, but we are also trained to be extremely efficient."

The third engineer finished and walked straight for the door, shouting over his shoulder, "At Apple Computer, Inc. we don't pee on our hands."

Hi-5 Bread: A RM252 million fraud?

- related to F8 and P7
this article is purely for educational purposes in relation to classes I conduct. All sources of information are derived from publicly available media. It is not intention of author to bring any disrepute, if any, to any parties. All opinions expressed are as it is, mere opinions. This is not to be construed as evidences for court or otherwise. 

 As an ACCA Lecturer, I enjoy work in Malaysia as it provides full of wonderful case studies of how:
 (I) Failures of companies to provide Financial Statements for Auditors to express true and fair opinion

(II) Failures of Corporate Governance and many times outright corruptions through collusions between so called “independent” watchdogs and

(III) Failures of Business strategies even though these companies are given Monopoly controls. That’s right, no competition but these Malaysian companies still failed! Examples, Tenaga Nasional, Plus Expressway, Perwaja Steel, and the latest is MAS as the only National Airlines with exclusive landing rights in the country. MAS has recorded the highest Corporate Loss in Malaysian history, amounting to RM2.5 billion shortly after it had a share swaps with Air Asia. The swap appears to be a steal or lop-sided bargain for MAS as it shares value were much higher a few months back. After the shocking announcement, MAS shares fell by 30%. Air Asia’s founder Anthony Fernendez is short changed for the his shares exchange for an almost bankrupt airline MAS.


AUDIT FRAUD : IMPACT ON AUDIT REPORT

Pic 01: Second best known Bread Hi-5

Pic 02: Bread Malaysians love

Let’s focus on another meaty and scandalous firm Silver Bird Group Bhd. A No.2 player in bread-maker, Hi-5 Bread (Pic 01) and associated confectionaries with brand as Silver Bird. The bread maker could never quite bridge the competition gap with Malaysia’s No.1 Bread brand, Gardenia (Pic 02 and Pic 03). Audit firm Horworth failed to obtain sufficient and appropriate audit evidences so that it was unable to express an opinion on the Financial Statements. In other words, whether the Financial Statements are reliable, your guess is as good as mine. Let’s see real-life application of Audit Principles as seen in F8 (Audit & Assurance) and to a limited extend P7 (Advanced Audit & Assurance).

Pic 03: The No.1 Bread in Malaysia

AUDIT ISSUE : ANALYTICAL PROCEDURES
An analyst who used to cover Silver Bird wonders why the company made cash calls every year. “They're a food and beverage company, how much money do they need and where did all the money go?” The analyst pointed out that even companies such as CI Holdings Bhd (which used to distribute Pepsi products) did not need so much working capital.

AUDIT ISSUE : POOR CORPORATE GOVERNANCE – Executive Directors lacking honesty
The suspension of three company officials group managing director Datuk Jackson Tan (Pic 04), executive director Ching Siew Cheong and general manager for accounts and finance Lai Poh Mei from Feb 24 to facilitate an internal inquiry would hopefully start to clear the air.

Pic 04: The founder Datuk Jackson turned fraudster or victim?

AUDIT ISSUE : TESTS OF DETAILS ON BALANCE FIGURES AMOUNT RM252 million!
Are the Financial records reliable? That would depend on whether records for the payments and sales transactions can be found, which brings us to the question as to why no proper records were kept as per the requirements of the Companies Act 1965. At issue were veracity of payments made amounting to RM7.6mil for the refurbishment of an existing warehouse and factory as well as information to verify additions of plant and equipment amounting to RM4.9mil. No Details to prove these material balances. Furthermore, transactions undertaken with five customers for the sweetened creamer business with revenue and cost of sales amounting to RM31.9mil and RM31.3mil respectively could not be verified. The auditors said they were also not able to confirm the veracity of sales transactions undertaken with six customers from the bakery and telecommunication businesses amounting to RM149mil, including RM83.9mil in gross telecommunication sales.

AUDIT ISSUE : TESTS OF CONTROLS EXPOSE WEAKNESSES
Doubtful payments for property refurbishments and machinery upgrades, unverifiable sales transactions, poor record-keeping these are things that have been baking at bread and confectionary maker Silver Bird Group Bhd.

AUDIT ISSUE : INTERNAL CONTROL WEAKNESSES
This would be the second time that the company stole the limelight, both for the wrong reasons. In September 2006, its High 5 bakery in Nilai, Negri Sembilan was shut down for two weeks and its halal certification was withdrawn following a raid by the authorities. The authorities had alleged that the bakery was unhygienic, employed illegal workers and used cooking oil without a halal certification.

AUDIT ISSUE : MATERIAL MISSTATEMENTS

Pic 05: Are External Auditors suppose to identify fraud?

This time around, the sums involved in these transgressions were not small given that the company has a paid-up share capital of RM203.34mil compared with the maximum alleged irregularities (Pic 05: F8 Examiner's favourite question is - External Auditors responsible for identifying fraud?) which the board of directors said could amount to about RM111.5mil.

AUDIT ISSUE : GOING CONCERN, IT MAY NOT BE
 Silver Bird Group Bhd. announced to the stock exchange that a major subsidiary of the company, Standard Confectionery Sdn Bhd, was in default of banking facilities repayments to its lenders, which included Bank Islam Malaysia Bhd, Malayan Banking Bhd, CIMB Bank Bhd, United Overseas Bank and RHB Bank Bhd. The poor record-keeping meant the directors were “not in a position to provide to Bursa Securities the solvency declaration statement within three market days from March 1”.

AUDIT ISSUE : FRAUD AND NEGLIGENCE
The directors said in the financial report for the financial year ended Oct 31, 2011 (FY11) that there might be bad debts and additional allowance that needed to be made for impairment losses on receivables. The suspension of three officials, including Tan, to facilitate an internal inquiry, would hopefully clear the air. “At the date of this report, the directors are aware that there may be circumstances that may render the values attributed to the current assets in the financial statements misleading,” they added.

AUDIT ISSUE : MODIFIED AUDIT REPORT
Compounding the uncertainty surrounding the company's future, the directors said they were unable to form an opinion on whether there would be anymore charge on the assets or any contingent liability which had arisen since the end of the financial year. In the dry, clinical language of financial reports, they said they were aware that there could be circumstances not otherwise dealt with in the financial report or financial statements which might render any amount stated in the financial statements misleading. They added that there could be items, transactions or events of a material and unusual nature likely to affect substantially the results of the operations of the company for the financial year.

AUDIT ISSUE : ETHICAL THREATS AS AUDIT COMMITTEE LACKS INDEPENDENCE
Tellingly, the independent auditors, Crowe Horwath, have refused to express an opinion on the financial statements because they were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. “During the course of our audit for FY11, we expressed concerns to the audit committee and the board of directors over the validity and recording of certain transactions for which we were not able to obtain the sufficient and appropriate audit evidence and satisfactory explanations from management,” they said in the financial report. So what went wrong? Did anybody see this coming? Were any transactions red-flagged before the independent auditors raised questions in the financial report? The regulators might also want to question the company over the frequent cash calls issued via private placements of shares, bonds/commercial papers and rights issues for working capital purposes over the years since its listing in June 2002. They said these matters cast a significant doubt on the financial performance and position of the company.

FINAL VERDICT
There are too much uncertainties surrounding Silver Bird Group Bhd. It’s no wonder that investors are selling down the shares holdings. This is a good case study that involves a broad subjects on Audit & Assurance.

Pic 06 : What governance? The rewards of theft - RM252 million

The case study also begs another question, what have the institutional investors been doing all this time especially Lembaga Tabung Haji who owns a substantial 22.2% and Berjaya Group controls 20.6%%? Why have they not install Non-Executive Directors to review the risks and internal control relevance in firm? Why didn’t they use their voting rights to remove CEO Datuk Jackson for regularly demanding cash calls when the business is not expanding. Well, that is another topic related to P1 on Corporate Governance (Pic 06).