Pic 1a & 1b: The most expensive vessel on earth
Pic 2: Malaysian Business bought Yatch for RM14.5billion?
In F8 (Audit & Assurance), we are taught to use Analytical Substantive Procedures. In simple definition means to compare 2 variables to arrive at a "PLAUSIBLE RELATIONSHIP".
To illustrate: recently there was allegation that a 29 year old Malaysian Businessman is so so rich that he could afford a RM$14.5 billion luxury yatch that was furnish interiorly with gold. That is simply difficult to phantom or understand. Simply impossible to be that expensive. (please see news on The Star papers below)
Most Expensive Vessel
The most expensive Ship ever built costs US$6.2 Billion or RM$18 billion. It is an American Warship cum Aircraft carrier which could take typically 75,000 tonnes extra load and has become the pinnacle of carrier development. It's powered by nuclear reactors and form the core of a fleet designed to operate far from home. Also has capabilities as "commando carriers" or "helicopter carriers". It's a moving military base at sea.
The ship is called USS George H.W. Bush (CVN-77). Its named after World War II veteran and former President of the United States, George H. W. Bush. The USS George H.W. Bush (CVN-77) is the final Nimitz super-carrier to be produced for the US Navy. It was commissioned in 2001 and built by Northrop Grumman for a cost of $6.2 billion.
The carrier was completed in 2009, and is docked in Virginia. At almost 1,100 feet in length, it’s one of the longest warships in the world. Its top speed is over 30 knots, which it reaches with the help of two onboard nuclear reactors. This power source is capable of keeping the ship running for more than twenty years without once having to refuel.
Can USA Afford such a ship?
United States’s military expenditure in 2010 was about $687 billion or roughly 4.7% its 2009′s GDP. China, on the other hand spent about $114 billion or merely 2.2% its GDP for the same period. No other country on earth has a larger defense budget than the United States. A lot of this money is spent on tanks, aircraft and carrier.
Can single yatch be valued RM14.5billion? (Sourced from The Star news)
Italian yacht builder Baia has claimed that the RM14.5bil golden yacht purportedly bought by a leading Malaysian businessman was fake, and photographs of it were digitally manipulated.
Baia sales manager Mario Boselli said there was no golden boat and the story was made up by a British designer.
“We only have normal boats here, not golden boats. It is a stupid story and has nothing to do with us. They took photographs from our website without permission,” he said in a telephone interview yesterday.
British boating magazine Motorboat & Yachting published an article on its website in which Borselli said the yacht was fake.
The real deal: A picture of the Baia One Hundred taken from the builder’s website and (inset) the doctored photo of the yacht.
He said he would be writing to the British designer to remove the photographs from his website but would not be taking legal action.
Photographs of Baia's One Hundred model were purportedly used for the story published in British daily The Sun about a 31m yacht called the History Supreme.
The report claimed the yacht was coated with 100 tonnes of precious metals and gemstones, making waves in Malaysia with many speculating on who the owner could be.
In the story, British jeweller Stuart Hughes was named as the person who designed the yacht.
Attempts to contact Hughes by telephone were unsuccessful.
Conclusion
Auditors perform their work with professional scepticism which is not to take evidences at face value. The need for audit evidences which are "reliable" and "relevant" to support their audit opinion.
The next time you read news online, blogs or newspaper reports, do use Analytical Procedures to arrive at the reasonableness of audit judgments.
Sources:
The Star, 2011, Hoax, http://thestar.com.my/news/story.asp?file=/2011/7/28/nation/9188405&sec=nation, 28 July.
