1.

Definition of Audit of Statutory Records

Statutory Audit is a checking of accounts required by law. A municipality may be required by its own law to have an annual audit of financial records or a company which is governed by any Law, the Law may require the audit to be conducted and the manner in which audit should be conducted and to whom the report of auditors should be presented. Like in case of companies the Companies Act requires audit of accounts, its reporting and manner of audit report. One conducted to meet the particular requirements of a governmental agency. Where such audits take place, the scope and audit programs are set by the governmental body. Banks, insurance companies, and brokerage firms have statutory audits. Since the auditor's report must conform to standards required by the governing agency, the statements and other financial data generated from these audits may not conform to Gaap. Statutory auditors are elected by shareholders and hold a position in the hierarchy alongside the board of directors A company must have at least one statutory auditor. A legally required review of the accuracy of a company's or government's financial records.

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Objective of Audit of Statutory Records

The principal objectives of the Statutory Audit is to ensure that the financial statements i.e. the Balance Sheet, Profit & Loss Account and Schedules forming part of Balance sheet and Profit/ Loss account, give a true & fair view and are free from any material misstatements. We ensure that the financial statements are drawn up with proper presentation and disclosure requirements as per the applicable laws. We also ensure that the company has fulfilled all the legal compliances. 1.4 Form of Audit of Statutory Records

Form of Audit Statutory Records or Audit Statutory Checklist are consists of ninth main titles to be fill up by the person during preparing the records or checklist at Registered Office. The main ninth titles that state in the form of Audit Statutory Records are: Status Register Office Minute Book Register of Members Share Certificate Book Register of Directors, Managers and Secretaries Register of Charges Annual General Meeting Auditors Report

1.4.1

Status

Status of the Company whether that company is public or private. 1.4.2 Register Office

Register Office means Company Secretary. We have to refer Form 44 in order to know where is the latest register office for that company. 1.4.3 Minute Book

Minutes are a written record of the business transacted at a meeting. Minutes must be authentic, complete and free from ambiguity. The Minutes will usually include: a heading stating the name of the body holding the meeting, the kind of meeting, and the place, day, date and time of meeting. names of persons present, and those attending ex officio or by invitation. a record of decision taken and resolution passed. record of items of business not requiring formal resolution (minutes of narration). names of proposers and seconders

1.4.4

Register of Members

All companies are required to maintain a Register of Member which is a prima facie evidence of any matters stated therein as required or authorized by Section 158 Companies Act 1965. The particulars required to be entered in the Register of Members are: the name and addresses of the members. the identity card number and nationality of the members. the amount paid or agreed to be considered as paid on the shares of each member. the number of shares held by the members and the shares certificate numbers. the date at which the name of each person was entered in the Register as a member. the date at which any person ceased to be a member. the date of every allotment of shares to member and the number of shares comprised in each allotment. the date of acquisition or transfer of shares and the amount and particulars of the shares involved.

1.4.4(1)

Transfer of Shares

During preparing the Audit of Statutory Records at registered office, there have an one requirement about the Transfer of Shares under Register of Members. Section 98 provides that a share shall be moveable property, and as such a shareholder may sell his share or pledge them as security for a loan. Section 103 provides that a transfer of shares shall be a proper instrument of transfer FORM 32A has been delivered to the company. 1.4.5 Share Certificate Book

Section 134 of the Company Act requires every company to keep a Register showing with respect to each director of the company particulars of: shares in the company or in a related corporation, being share in which the director has an interest, and the nature and extent of that interest. debentures of or participatory interests made available by the company or a related corporation, debentures or participatory interest in which the director has an interest and the nature and extent of that interest. rights or options of the director(s) and / or other person(s) in respect of the acquisition or disposal of shares in, debentures of or participatory interest made available by the company or a related corporation. contracts to which the director is a party or under which he is entitled to a benefits being contracts under which a person has a right to call for or to make delivery of shares in, debentures or participatory interest made available by the company or a related corporation.

1.4.6

Register of Directors, Managers and Secretaries

According to the Section 141 of the Act requires every company to keep at its registered office a Register of Directors, Managers and Secretaries. The Register shall contain with respect to each director his consent writing to the appointment as such and shall specify: his present full name, any former name, his usual residential address, his date of birth and his business occupation and identification. particulars of any other directorship of public companies or companies which are subsidiaries of public companies held by the director. particulars of alternate directors to the same extent as that of a director must be entered in the Register and for identification purposes the statement alternate to so and so should be inserted against his name. the date for his appointment, removal, resignation and any changes in his particulars must be entered in the Register within a period of one(1) month after the date of the changes. 1.4.6(1) Register of Directors According to the Section 123(4) Companies Act 1965, there must be at least two promoters who will usually be the first subscribers to the Memorandum of Association of the company and each promoters must sign a separate FORM 48A.

1.4.6(2) What are the Section required in order to relate the Form 32A and Form 48A? According to the Section 169: Profit / Loss Account, Balance Sheet and Directors Report, (g) in respect of each person who, at the end of the financial year, was a director of the company (i) whether or not (according to the register kept by the company for the purposes of section 134 relating to the obligation of a director of a company to notify such company of his interests in shares in, or debentures of, the company and of every other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company) he was at the end of that year, interested in shares in, or debentures of the company or any other such body corporate and, if he was so interested, the number and amount of shares in, and debentures of, each body (specifying it) in which, according to that register, he was then interested.

1.4.7

Register of Charges

A company may raise a finance by borrowing from private individuals or financial institutions to finance its operation through the issues of debt securities. The company may give security in the form of a mortgage by creating a fixed charge over the companys specific assets. In addition, the company may create a floating charge over its present and future assets. Section 115 of the Act governs the registration of the charges where every company must keep at the registered office a Register of Charges and enter therein all charges specifically affecting the property of the company, giving each case a short description of the property charged, the amount of the charge and the names of the persons entitled thereto. 1.4.8 Annual General Meeting (AGM)

Section 143 provides that every company must hold an AGM once in every calendar year. As for the first AGM, a company is allowed to hold it not later than 18 months from the date of its incorporation. Subsequent AGMs must be held within fifteen (15) months from the date of the preceding AGM. The Board of Directors is responsible in convening an AGM, and if the Board of Directors fails to do so, the court may on the application of any member order the AGM to be cancelled. The AGM is the only opportunity that a member has to meet and query the directors on matters pertaining to the running of the company.

The Board of Directors is authorized to convene the AGM and fourteen (14) days notice is sufficient to call for the AGM for the purpose of transacting ordinary business. However if there is any special resolution to be passed at the AGM, then twenty one (21) days notice must be given to the members. A Proxy Form attached to the notice and the audited accounts to be tabled at the AGM must be sent to the members. The main purpose of holding an AGM is to transact the following ordinary business: The consideration of the accounts, balance sheet and the reports of the directors and auditors. 1.4.9 Declaration of dividend as recommended by the directors. Re-election of directors. Appointment and fixing of the remuneration of auditors. Auditors Report

Every auditor of a company shall report to the members on the accounts required to be laid before the company in the general meeting and on the companys accounting and other records relating to those account and if, the company is a holding company for which consolidated accounts are prepared, shall also report to the members on the consolidated accounts.

An auditor should state in his report whether the accounts are, in his opinion, properly drawn up: To give a true and fair view of the matters required by Section 169 of the Act. In accordance with the provision of the Act so as to give a true and fair view of the companys affairs. In accordance with the applicable accounting standards.

The auditors should state in their report whether the accounting records and other records and Register of the company and its subsidiaries have been properly kept and maintained in accordance with the provision of the Act.

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LITERATURE REVIEW

3.0

METHODOLOGY

Data collection Method

Primary Data Observation Interview

Secondary data Company records Internet and library

Figure 3.0.1; Data Collection Method

3.1

Primary Data

3.1.1 Experience and Observation During the practical training in Law & Associates, I have an opportunity to work exposure and know more about audit of statutory records. During these six months, I was face type of problems. All of this, if I really unable to settle myself, I will ask the opinion and solution from seniors. From that they do advice me and informed me the procedures in statutory records and some of the problems that will meet during the audit process.

3.1.2 Interview Have an interviewed session with the Audit Department Assistant Audit Manager Ms Khatijah Bee Ismail, Tax Manager or Human Resources Manager Mdm Noorshamsiah Ahmad. 3.2 Secondary Data 3.2.1 Company Records I have obtained more information regarding audit of statutory records from all the audit staffs, especially Mr. Raymond and Mr Lem. After I have told them about this practical assignment, they gave me a completed current working paper file which includes all the audit of statutory records. As normal, all the auditor accounts are refer to Companies Act, FRS and other accounting standard. 3.2.2. Internet and Library I had browsed through internet to gain additional information and articles which are relevant to my report. Besides that, academic books, journals and articles are secondary resources that build up the strong base for my research. All these resources further explain my study in detail so that the topic is understood better.

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FINDINGS The information's and documents must be keep at Registered Office. Then the information's and resolutions must always up to date . Therefore the information we get during preparing the statutory audit will be more complete and accurate in order to prepare the full set of Directors Report. In addition, if the company have any resolutions it must follow the procedures that fixed by the Companies Commission of Malaysia (CCM).

5.0

RECOMMENDATION This section presents the recommendation for the project of Audit of Statutory Records in Directors Report at Law & Associates. In my opinion, in order to prepare the full set of Directors Report we must have the up to date information's and resolution of the companies. It is because information from Audit of Statutory Records will be disclosed in Directors Report. So, I suggest before go to registered office for the first time experience especially trainee, as a senior staff should give a short briefing regarding to the requirement in fill up the Audit of Statutory Records. It will make the new workers or trainee more confidence during fill up the Audit of Statutory Records.

REFERENCES

Internet Sources: http://en.wikipedia.org/wiki Zubaidah Zainal Abidin. Malaysia Company Secretarial Practice: 2nd Edition. Pearson Malaysia Sdn Bhd. 2008 Mr Lam Weng Liong (Audit Manager, Law & Associates) Mdm Noorshamsiah Ahmad (Tax & Human Resources Manager, Law & Associates) Ms. Khatijah Bee Ismail (Assistant Audit Manager, Law & Associates) Mdm Salasiah Malek (Assistant Tax Manager, Law & Associates) All staffs at Law & Associates.