MAF 671

INTEGRATED CASE STUDY

CASE STUDY 1:
WIRTE UP ASSIGNMENT

PREPARED FOR:
PM DR. TUAN ZAINUN BINTI TUAN MAT

PREPARED BY:
1. EDRY AMIRUL BIN NAZRUL AZRI CHAN
(2016270288)

2. NUR IQMAL REDZA BIN ZAHARUDIN (2016270268)

CLASS: AC2208C
 An audit committee plays an important part in operating committee of a company’s
Board of Directors which in charge of overseeing financial reporting and disclosure. An
effective audit committee can bring transparency, focus and independent judgement needed
to oversee the financial reporting process.

From this case, the Audit Committee of Mentara Bhd comprises four members which
are Jalil and three other directors. The Chairman of Audit Committee is Datin Jasmin who is
Dato’s Johan’s wife and none of them are financial expertise. The meeting only meets once
in a year, which right before the Annual General Meeting (AGM).

According to Bursa Malaysia, at least one of the members of the audit committee
must fulfil the financial expertise requisite of paragraph 15.09. Paragraph 15.10 also
prescribe that the chairman of the audit committee must be an independent director. Bursa
Malaysia also state that the meeting should be no fewer than four meetings during the year,
held to coincide with the key dates within the financial reporting (quarterly results and annual
reporting).

If Mentara Bhd want to improve the effectiveness of Audit Committee, Mentara Bhd
should rearrange the Audit Committee by appointing the new member that meets the
standard qualification by Bursa Malaysia. Mentara Bhd must ensure that all audit committee
members must be non-executive director, with majority of them being the independent
directors. Others than that, one of the members of Audit Committee must at least being the
member of the Malaysia Institute of Accountants. If the members of Audit Committee is not
the members of MIA, the members must have at least 3 years’ working experience and
he/she must have a passed the examination specified in part I of the First Schedule of the
Accountant Act 1967 or he/she must be a member of one of the association of accountants
specified in Part II of the First Schedule of the Accountants Act 1967.

Mentara Bhd also should elect the new chairman that have no direct relationship with
anyone in the company which is non-executive director that required by Bursa Malaysia.
Mentara Bhd shall have at least four meetings in financial year and such additional meetings
as the Chairman shall decide in order to fulfil the duties. The Audit Committee meeting must
have chaired by the chairman and if the chairman is absence, another member who is an
independent non-executive director nominated by the Audit Committee.

In conclusion, Mentara Bhd can be improving the effectiveness of Audit Committee

by comply the Bursa Listing Requirements. Specifically, the company should handle an Audit
Committee’s meeting frequently, recommended to be no fewer than four times. In the other
hand, the company assign an independent director as the Chairman of the company and
appoint at least a financial expertise director as the member of the committee.