Reference no: EM133156491

Question -

(a) Malik is the CEO of Cemara Bhd. His final vote will determine the choices of internal control in the company. Malik understand that the company has limited amount of budget. Therefore, debate which of the controls (i.e. preventive, detective and corrective) he should spend on. Include percentage of allocation for each control.

(b) Internal controls provide reasonable assurance that certain control objectives are achieved. Based on the following scenario, criticise the effectiveness of the controls and provide recommendation where necessary.

(i) Melaka Sdn Bhd has its backup and disaster recovery plan well prepared. Since the company feels threatened with fierce competition from its competitors, the top management decides not to share the plan with everyone, fearing it would be disclose their confidential information.

(ii) In order to save cost, Jemari Bhd installed only 5 printers to be shared among 50 of their staff. There are 5 dedicated computers connected to the printers. All staff will have to bring their thumb drive to one of the computers in order to print their document.

(iii) Mentari Bhd had installed a closed circuit television (CCTV) camera to prevent unauthorised people from entering the storeroom where all the inventories are kept. Last week, the CCTV was found to be not working and the management decides not to fix them.

(iv) Understanding the importance of having a security guard to watch over the warehouse, Kelinchi Bhd employed two guards who works in two shifts - day and night shift. In order to cut the costs, the company employed the guards who barely understand either Malay or English language.

(v) Titi Sdn Bhd is a company that sells baby merchandise. It has a physical store that accepts payment only through debit cards. Knowing they do not keep any cash in the premise, the management only install a padlock in the main door for protection.