indusrial training report. (accounting)

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INDUSTRIAL TRAINING REPORT CPL & CO ABSTRACT Industrial training is one of the requirements to be fulfilled in order to obtain a diploma. Each student in this field needs to do industrial training in audit firm that is a recognized member of Malaysian Institute of Accountants. The students are compulsory to undergo an industrial training for duration of three months which consist of 13 weeks before completing their courses. The objective of this industrial training is to expose students to the actual working environment. Besides, to cultivate teamwork, spirit and familiarize with colleagues. By undergo the industrial training, students will create a trust worthy and responsible person. Besides that objective of industrial training is to build self-confidence among students and let students know the technical knowledge and professionalism. I was placed in auditing and taxation department during my industrial training. This industrial training really 1

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Page 1: indusrial training report. (accounting)

INDUSTRIAL TRAINING REPORT CPL & CO

ABSTRACT

Industrial training is one of the requirements to be fulfilled in order to obtain a

diploma. Each student in this field needs to do industrial training in audit firm that is a

recognized member of Malaysian Institute of Accountants. The students are compulsory

to undergo an industrial training for duration of three months which consist of 13 weeks

before completing their courses.

The objective of this industrial training is to expose students to the actual working

environment. Besides, to cultivate teamwork, spirit and familiarize with colleagues. By

undergo the industrial training, students will create a trust worthy and responsible person.

Besides that objective of industrial training is to build self-confidence among students

and let students know the technical knowledge and professionalism.

I was placed in auditing and taxation department during my industrial training.

This industrial training really examines the understanding and responsibility in

completing the assignment given by the firm. Specifically it measures the creativity in

conducting the task to fulfill the firm and clients wants and needs.

This training gives me good experience from the view of implementing my

knowledge in accounting aspects. Last but not least, I had learnt more about auditing and

taxation.

ACKNOWLEDGEMENT

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Sometimes words fall short to show gratitude, the same happened with me during

this project. The immense help and support received from Cpl & Co overwhelmed me

during the project.

It was a great opportunity for me to work with Cpl & Co, pioneer in the field of

accounting and taxation. I am extremely grateful to the entire team of Cpl & Co, who

have shared their expertise and knowledge with me and without whom the completion of

this project would have been virtually impossible.

My sincere gratitude to Ms.Sara Chin (Secretary of the company) for providing me

with an opportunity to work with them as a company project guide who has provided me

with the necessary information and her valuable suggestion and comments on bringing

out this report in the best possible way.

I am highly indebted to Ms.Sharon (working colleagues) who has provided me the

necessary information and her valuable suggestion and a good support in understanding

the basics of accounting and taxation easily.

I feel great pleasure to cordial thanks Ms.Lee (Auditor) . I also very thankful to

my friends who help me in completion of the project . I am thankful to the power that

always inspires me to take right step in the journey of success my life.

1.0 INTRODUCTION ABOUT THE FIRM

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1.1 SUMMARY

Below is a brief explanation of the capabilities and relevant experiences of

the firm,

CPL & CO offers the following unique benefits:

to utilize its resources and technical expertise to deliver professional services on a

timely basis;

to provide personalized service of partners at all times;

to provide professional business consulting services in local business challenges.

to offer value-added services with competitive professional fees.

to provide secretarial services.

1.2 FIRM PROFILE

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Over the past years, CPL & CO (an affiliated member Malaysian Institute

of Accountants ) has built up its affiliate "partner" with L.C.SIM to cater local

business needs of its clients.

Other than the traditional services such as audit and taxation, CPL & CO

also specializes in financial advisory, insolvency and consulting practices.

Through its local affiliations, CPL & CO is in the position to promptly meet its

clients' local business needs, irrespective of where the business operation is

conducted.

The size of CPL & CO offices enables it to provide a depth of technical

experience across a full range of services thus having the added advantage of

establishing close professional relationships with its clients. The combination of

technical resources and personal commitment among the players has contributed

to CPL & CO’s position of prominence and popularity in this line of business.

Furthermore, CPL &CO works closely together with the relevant professional

bodies to ensure that its clients' interests, growth and needs are fulfilled at all

times.

1.3 VALUE FOR MONEY APPROACH

CPL & CO's approach to its service assignment is based on the "Team

Concept."

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In the course of carrying out its responsibility, the scope of the service and

review work is allocated to the appropriate staff levels, wherever possible, at a

lower charge out rate. Such allocation of work and duties ensures that the fees are

kept to the minimum and correct level.

Furthermore, this arrangement allows our clients to gain access to a wider

range of expertise with the work being completed by the appropriate qualified

staff members which also ensures timely and efficient completion of service

assignment.

CPL & CO maintains a strong partner involvement and any work

performed is invoiced in accordance with the time taken to complete the task

assigned. Naturally, "confidentiality" is held to be of utmost importance and as a

client of CPL & CO, confidentiality is assured at all times.

Mission statement:

To be recognized as a strategic financial business partner in fulfilling and to

value-add the needs of our clients by way of a Multiple Disciplinary Partnership.

Vision statement:

To continuously scale new heights and to embrace the vision of “The Business

Mind”, with the focus to meet global challenges of tomorrow.

1.4 OUR SERVICES

The primary role of CPL & CO is to perform assurance and compliance

service in accordance with the guidelines set out by the legislation of the country.

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CPL & CO also has the technical expertise and experience to conduct financial

due diligence reviews and internal audit where appropriate.

CPL & CO tailors its professional business approach to the specific needs and

requirements of its clients to ensure that the work is conducted in the most

efficient and cost-effective manner.

In this respect, an integrated approach to our professional business

services is adopted to fulfill the requirements and objectives of the three main

areas, namely:

1.4.1 OPERATING BUSINESS

The services required for the operating business embody the following:

a) Tax compliance (Forms C & R) and CP 204 for Self-Assessment

regulations.

Due to the complexity and intricacy of the self-assessment system,

CPL & CO has designed a system of producing relevant information

necessary to meet the stringent requirements under the new taxation

system. Prior to the year-end, Form C is completed for submission, the

necessary CP 204 is filed on a periodic basis as and when there are

changes to the tax estimates. CP 204 A relating to revised assessment

is lodged should there be a change in the tax estimate. Form R is

submitted at the end of the fiscal year giving information on the tax

credit availability of the company under Section 108. This system

allows CPL & CO to reduce the time required to collate and analyze

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the tax information collected, which saves clients unnecessary costs as

well as allowing the company the opportunity to provide timely and

proactive taxation advice.

b) Tax consulting services

Local Taxes

The Malaysian Taxation System has recently revamped its system in

line with globalization which has created a time of constant change

and challenges.

CPL & CO's taxation division has undergone rigorous tax training

exercise in order to gear itself to provide proactive tax advice and to

ensure that its clients are kept abreast of the latest tax changes and to

comply with the taxation responsibilities.

CPL & CO provides advice and information of the ever-changing

taxation system to its clients to ensure that clients are fully aware of

the taxation installment obligations under the self-assessment system

which includes the lodgment of the relevant taxation returns.

c) Service & Sales Tax/ Goods and Services Tax

CPL & CO has considerable experience to assist clients with the

transition to Service and Sales Tax and would assist clients to apply

for registration when such need is required.

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d) Benefits in kind (BIK)

To ensure that the year-end tax return forms are completed fully, CPL

& CO has devised a system to collate the relevant information and data

collection for the purposes of preparing the fringe benefits tax annual

returns. This system minimizes time required which enables CPL &

CO to adopt a more efficient and proactive approach in advising its

clients.

Salary packaging may best be described as the structuring of an

employee's total remuneration to take advantage of any inherent

savings by substituting cash salary with a range of other benefits

known as "Benefits in kind" (BIK). Such inherent savings are derived

from the confessional valuation provisions contained within the

Income Tax Ruling ITR 1997/2 for the valuation of BIK.

Salary packaging allows employers to reward certain key employees

by providing such employees with all the additional benefits over and

above normal cash salary. Such scheme ensures that the employers

have an edge over their competitors when it comes to matching

remuneration, motivation and retaining employees' loyalty.

e) Business consulting

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CPL & CO offers a range of business consulting services starting with

strategic and business planning down to assisting with organizational

change and restructuring, process re-engineering, market strategy, cost

management reviews as well as e-commerce and internet strategy

development. The services are provided to assist clients of CPL & CO

in dealing with the challenges faced in a rapidly changing and complex

global environment where a single firm or organization is no longer in

isolation but forms part of the global economy. Such environment

presents itself numerous opportunities but also many potential pitfalls.

f) Secretarial services

It is a must for all companies to have their statutory files maintained

by qualified Company Secretary as well as to prepare and submit

relevant documents on time to the Company Commission of Malaysia

(CCM). His service is providing to maintain and update statutory

records of companies. Such service includes company formation, filing

of statutory forms, attending meetings and preparation of minutes,

advising clients regarding company secretarial matters.

g) Audit services

CPL & CO is in the position to assist its clients who require an internal

audit review or due diligence review to be carried out for a particular

business reason such as to satisfy the company financiers. The nature

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of the audits may vary from a limited scope audit to a full scope audit

to satisfy assurance and compliance requirements.

2.0 DETAIL DESCRIPTIONS OF TRAINING

During my three months practical training in the audit firm, I engaged in main

two areas, which are auditing and taxation.

For auditing, I had handled few companies by my own and helped out my seniors

for few big companies which are our priority given to them. Besides that, they also

trained me to prepare working papers which also known as lead schedule, finalized audit

report, and prepare a letter that has to be sent to clients, banks, debtors and creditors. I

managed to implement my knowledge and learned many things from there.

I had learnt how to compute tax for companies. It’s really interesting. I also had

given chance to review the tax computation done by other staffs. I had prepared Form C

and Form R for the companies. In addition, I also prepared many letter regarding tax

which requested by the clients to Inland Revenue Board (IRB). Detailed descriptions of

my task have been discussed in detail in this report.

3.0 DETAILS ABOUT CLIENTS

CLIENTS NATURE OF BUSINESS

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1) Guan Seng Hardware Sdn Bhd Principal activity is operating a

hardware shop.

2) Kedai Ubat Xinxianghe Sdn Bhd Principal activity is operating

traditional Chinese medicine.

3) Seacrest Sensation Sdn Bhd Principal activity is operating a

Korean restaurant.

4) Honey Happy Home Principal activity is operating old

folks home.

5) Han’s Cake & Cafe Principal activity is as bakers and

manufacturers of an dealers in bread,

flour, biscuits and operating cafes

6) CNY Chemical Engineering Sdn Bhd Principal activity is as agriculture

chemical manufacture.

7) CNY Aquaculture Sdn Bhd Principal activity is operating

company on aquaculture products.

8) CNY Biotech Sdn Bhd Principal activity is as agriculture

product manufacture.

9) CNY Bioscience Sdn Bhd Principal activity is as agriculture

product manufacture.

10) Uptrend Engineering Sdn Bhd Principal activity is constructing and

contracting buidings.

11) Mawisa Enterprise Principal activity is as car accessory

shop

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12) U.E.Confectionery Sdn Bhd Principal activity is operating a

restaurant.

13) U.E.Teahouse Sdn Bhd Principal activity is operating a

restaurant.

14) Top Master Home Sdn Bhd Interior design company

4.0 NOMINAL LEDGER AND TRIAL BALANCE

A company must keep records and books of accounts including a cash book, a

sales ledger, a purchases ledger and a general ledger. Supporting documents such as

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invoices, bank statements, pay-in slips, cheque butts, receipts for payments, payroll

records and copies of receipts issued should be retained. Receipts issued must be serially

numbered. A valuation of the stock in trade should be made at the end of the accounting

period and the appropriate records maintained.

Records in manual or electronic form should be sufficient to explain each

transaction and to enable a true and fair profit & loss account and balance sheet to be

prepared. If computers are used to record the transactions, original source documents

such as invoices and receipts should be retained. Where the original documents are in

electronic form, the documents can be retained in such form. The system documentation

including the accounting manual, chart and code of accounts should be maintained.

All bank statements or savings books, into which account money for the business

has been credited or withdrawn, should be retained. At the end of the accounting period, a

physical stock-take should be made to ascertain the quantity and the cost of the stock in

hand or the cost of work in progress.

The first step in performing audit is to check opening balances of balance sheet

items. This can be done by check whether the amount reflected in previous audit report

same as the opening amount in client’s account. If there is any difference, note of that

amount and make adjustment of the amount.

The next step is to check journals whether have been posted to correct nominal

ledger account or not. Scrutinize nominal ledger journals made during the period for

evidence of any unusual journal entries. For such items, obtain satisfactory explanations

from the client. Then obtain a closing trial balance for the current period. Check that the

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trial balance is mathematically accurate and trace numbers to the draft financial

statements and lead schedules. For agreed post trial balance audit adjustments, check that

the client has processed agreed journals into the nominal ledger and financial statements

properly. After that perform an audit according to schedule, start off by balance sheet’s

items.

THE AUDIT PROCESS

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Getting Elected as Auditor

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Diagram 1.0 The Audit Process

SCHEDULE A - PROPERTY, PLANT AND

EQUIPMENT

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Preparation of Draft Financial Statements

Audit Process on Working Paper

Data Entry

Print

Supervisor checks the Draft accounts

Final check and Casting

Audit Report

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There are few procedures to be followed during the audit work for this section.

Firstly, obtain a summary schedule of each significant class of property, plant and

equipment to satisfy disclosure requirements, showing opening balances, additions,

disposals, revaluations and closing balances. Ensure that the property, plant and

equipment exist and are genuine assets of the business and are beneficially owned by the

business and any restrictions, pledges or liens on the property, plant and equipment are

identified and adequately disclosed in the financial statements. At the same time, we have

to prepare fixed assets schedule as to attachment for this section.

Test the mathematical accuracy, agree opening balances to prior period working

papers and agree closing balances to the nominal ledger and investment ledger where

maintained. Vouch against invoices, contract notes, and agreements for any additions or

disposals. Confirmation of documents needed from the client. Ensure that all property,

plant and equipment are included in the balance sheet, income from investments is

complete and gains or losses on realization of property, plant and equipment are correctly

stated. In additions, ensure the property, plant and equipment are properly disclosed and

capitalized. Ensure that property, plant and equipment are accurately stated at cost or

revalued amounts and provided against where necessary.

In this audit firm we normally do not conduct physical verification of the assets to

ensure its existence. It is only applicable to a very large amount of assets. Then, check

calculation of the rates of depreciation to ensure that the rates used are reasonable and

consistent with previous years. If the assets are charged, ensure that the particular charge

is contained in the register of charges and relevant forms are filed. Where possible, obtain

a copy of the relevant forms.

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SCHEDULE C - INVENTORIES AND WORK IN

PROGRESS

For this section, first of all obtain stock list and vouch as follows:

a) Test additions and extensions.

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b) Check pricing with latest purchase invoices and compare with previous year.

c) Check to the company's stock records.

The next step is to ensure the valuations of stocks shown are at the lower of cost or

net realisable value or other accepted Accounting Standard. After that, obtain stock

certificates signed by the directors confirming the total stock and the location of the

stock. Ensure that closing stocks do not include stock owned by third parties held by the

company on their behalf. Besides that, check for stock located or held by third parties

which belongs to the company is taken up properly. If stocktake was carried out at year-

end, ensure that stocks shown in the balance sheet reconcile to the inventory records

taken at the stocktake.

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SCHEDULE D - TRADE RECEIVABLES

For this section, balances must be traced to schedule of debtors, cast schedule to

agree with control account, balance sheet and debtors’ ledger. Scrutinise schedule of

directors' accounts, subsidiary or associates or related companies accounts and non-trade

items which should be shown separately.

1. Test check selected accounts as follows:

a) Check casting.

b) Enquire into large credit balances.

c) Scrutinise for unusual entries.

Then, review long outstanding accounts with management as to its collectibility and

the necessity to provide for bad and doubtful debts. Check subsequent receipts.

Scrutinise all accounts not supported by subsequent receipts and note or list debts

outstanding for over one year. Seek explanation from the client as to the delay in

payments. Besides that, obtain direct confirmation of balances especially large balances

where possible.

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SCHEDULE E - SUNDRY RECEIVABLES AND

PREPAYMENTS

The first procedure for this section is to obtain a summary of other debtors,

prepayments and accrued income analysed by category and between amounts due within

one year and those due after one year. Ensure other debtors exist and are genuine assets

of the business. Test the mathematical accuracy and agree or reconcile balances to the

nominal ledger. Then, compare an analysis of other debtors, prepayments and accrued

income with prior periods. Explanation needed for any significant or unexpected

changes.

In addition, review related income and expense accounts for evidence of omission

of significant prepayments. Obtain confirmation of significant advances, for an example,

staff loans and inquire into the reason for such advances. Other than that, here we can

obtain direct confirmation from all entities, this is applicable only for large amounts, with

which the entity has loans or notes receivable at the balance sheet date. This can be done

by preparing a confirmation requests from the respective parties.

Ensure loan and notes receivable balances reflect a proper cut off of receipts and

disbursements. Obtain an analysis of any loans and notes receivable written off by

determine that significant write-offs have been properly authorized, for an example, in

Board minutes. Review the propriety of recoveries if there is any.

Other than that, check translation of any foreign currency loans and notes

receivable balances and cash movements and treatment of exchange differences. Besides

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that, review document and then test the process used by management to determine any

allowance or provision for irrecoverable loans and notes payable. Review subsequent

events or transactions for any indications of required adjustments to the

allowance/provision for irrecoverable loans and notes payable for the old and unusual

outstanding balances with the client.

Review subsequent cash receipts for evidence of significant collection problems

and assess percentage of period end debts collected by the date of audit fieldwork. For

significant other debtors, perform vouching to supporting documentation and consider

recoverability and if there is a need for a provision for non-collection.

Besides that, test the calculation of material prepayments and vouch to supporting

invoices and other documentation. Meanwhile, for material accrued income, examine

supporting sales contracts and customer agreements, test that sales invoices have been

raised subsequent to the balance sheet date and for particularly material balances,

consider confirmation of details with customer.

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SCHEDULE F - CASH AND CASH EQUIVALENTS

Procedures that to be followed for this section is, firstly obtain a schedule of all

cash and bank accounts open at the balance sheet date or existing during the period

showing the account number and balance per the nominal ledger. Check the casts and

agree balances to the nominal ledger. Compare the list of cash and bank balances with

prior periods and budgets. Ensure cash balances as presented in the balance sheet,

properly reflect all cash and cash items on hand, in transit or on deposit with third parties.

Compare total petty cash payments with prior periods and on a monthly basis.

In addition, obtain an analysis of interest received and paid in respect of bank

deposits and bank overdrafts. Obtain direct confirmation of period end balances from all

banks with whom the entity conducted business during the year by the use of bank

confirmation letter. Besides that, enquire of management whether new bank accounts

have been opened in the period and review confirmation letters, board minutes and cash

books for new accounts. Inspect or confirm certificates of deposit and other time deposits

at balance sheet date.

Ensure cash balances reflect a proper cut-off of receipts and payments. This can

be done by reviewing review receipts and payments in the cash book for 5 items either

side of the balance sheet date and check the validity and timing of material items and

trace transfers between bank accounts, including related parties for a selected period

either side of the balance sheet date and determine that transfers are properly recorded in

the correct period. If control over cash is weak: obtain returned cheques in respect of any

unusual payments identified and examine details of payees and amounts recorded in the

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cash payments book and check propriety and review or prepare a proof of cash

reconciliation and corroborate the totals of receipts and payments recorded in the selected

period.

The next step is to obtain a copy of the bank reconciliation for each account at

the balance sheet date and ensure it agrees the bank balance figure to the bank statement

and bank confirmation letter. Then trace deposits in transit and uncleared cheques to

after date bank statements and reconcile the balance with the nominal ledger. Examine

documents supporting significant uncleared deposits and outstanding cheque payments

which are not cleared at the audit date for cut-off. Scan the cash and bank nominal

ledger accounts for evidence of unusual or reconciling entries. Explanations needed for

such items from the client.

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SCHEDULE G - GROUP AND INTERCOMPANY

INDEBTEDNESS

Disclosure of inter-company balances and transactions is required in respect of

the Company and related corporations, for an example, between the Company and other

companies within the same group as well as companies or firms in which the directors

have interest. Inter-company balances include those arising in the ordinary course of

business or from loans and advances or payments made on behalf of each other.

For this section, obtain an analysis of amounts due to and due from group, joint

venture and associated undertakings, analyzed by type between amounts due within one

year and those due after one year, including movements in the year where necessary.

Check the casts and agree balances to the nominal ledger. Then compare balances due

from group, joint venture and associated undertakings with prior periods and explain

significant change as well as taking group payment policies into account.

Check the year end translation of balances denominated in foreign currencies.

Obtain a confirmation letter from the related party of the balance due and any repayment

and interest terms. Discuss with management regarding the basis of and reason for

transactions and intra group trading policies if high value or unusual transactions in the

year.

Consider the recoverability of debtor balances by reviewing subsequent cash

receipts and the latest audited financial statements. Obtain an analysis of interest payable

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and receivable on intra group, joint venture and associated undertakings balances. Here

we have to review basis of interest calculation.

Besides, check that amounts due to and due from group, joint venture and

associated undertakings are only netted off in respect of balances relating to the same

party and where a right of offset exists. Determine if any balances due from group, joint

venture and associated undertakings are charged or restricted.

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SCHEDULE H - TRADE PAYABLES

For this section, trace balances to schedule of creditors, cast schedule to agree

with control account, balance sheet and creditors’ ledger. Scrutinise schedule of

directors' accounts, subsidiary, associates or related companies accounts and non-trade

items which should be shown separately. Verify balances with creditors' statements.

Where no statements are available, select material balances for circularization, vouch

with purchase invoices and check for subsequent payments after year-end.

Besides, verify large balances, especially on the nature of such balances and on

how they arise. Conduct a search for unrecorded liabilities after year-end and ensure that

such liabilities pertaining to the year under review are taken up in the accounts as

accruals. Obtain direct confirmation of balances, especially large balances where

possible. Liabilities need to be segregated into short-term and long-term, where amount

due within 12 months fall under short-term liability meanwhile amount due after 12

months fall under long-term liability.

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SCHEDULE I - SUNDRY PAYABLES AND

ACCRUALS

Obtain a lead schedule supporting required disclosures for other creditors and

accruals and deferred income. Test the mathematical accuracy, agree comparatives to

prior period working papers and agree or reconcile closing balances to nominal ledger.

Compare an analysis of other creditors, accruals and deferred income with prior periods.

Compare related income and expense accounts with prior periods. Explanation needed

for any significant or unexpected changes and consider any evidence of omitted accruals

or deferred income.

Besides, obtain a list of bills of exchange outstanding at the year end. Test the

mathematical accuracy and agree to the lead schedule. Agree details of bills to the

clients bills register and check that bills were subsequently met on the due date.

Review the summary of other creditors. Test the calculation of significant other

creditors and vouch to relevant supporting documentation. Besides, review the pension

contributions control account in the nominal ledger and ascertain if payments to the

pension scheme were properly made on a timely basis in respect of employees and

employers contributions. Review an analysis of accruals including interest separately

and deferred income. Test the calculation of material accruals and vouch to relevant

supporting documentation.

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For test pension costs accruals, enquire into pension scheme position and

ascertain how and when accrual will be eliminated. In addition, review the effect of

changes to benefits in the year.

Sometimes we need to discuss with management the method for establishing the

completeness of accruals and estimating the accrual needed. Develop an independent

expectation of accruals and consider reasonableness in comparison with amount

recorded.

For accrued payroll costs, ensure that it agrees the calculation and subsequent

payment of accrued salaries and wages and check the calculations of holiday pay and

ensure that the accrual is adequate. For deferred income, obtain an analysis of all items

included in the period end balance and of movements in the period. Check the validity of

deferred income and vouch to relevant supporting documentation. Besides, check that

the amount of deferred income released to the profit and loss account is properly

calculated based on a consistent basis with prior periods and the related asset.

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SCHEDULE J - DIRECTORS’ ACCOUNTS

For this section, we have only to look at the movement in directors’ account

during the financial year. Lead schedule have to prepare based on the movement to

check the balance due to or from the directors. Any expenses paid by any of the

directors of the company need to take into the account as well as income received by the

directors in preparing this lead schedule.

The balance confirmation letter needs to be prepared for each director in order to

clarify the balance in the directors’ account.

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SCHEDULE K - HIRE PURCHASE OR LEASING

ACCOUNTS

There are few procedures to be followed in preparing Schedule K. First of all,

obtain an analysis of loans and finance lease obligations due within one year and due

after more than one year including the issue date, maturity date, face value, interest rate

or terms, opening amounts, increases in loans and finance lease obligations, repayments,

unamortized and amortized discounts and closing balances. Test the mathematical

accuracy and agree or reconcile balances to the nominal ledger.

In addition, obtain an analysis of interest payable on finance lease obligations,

bank loans and overdrafts and other loans. Ensure the balances agree to the nominal

ledger. Compare debt balances such as loans and finance leases with prior periods and

budgets. Consider the interest amortization of debt issued at a discount or redeemable at

a premium. Calculate interest expense as a percentage of average debt for evidence of

unrecorded liabilities.

Other than that, ensure that all relevant terms and details of loans are known

including name of lender, original issue date, proceeds received means the net of eligible

issue costs, security, interest rates applying and repayment terms. Update permanent file

with relevant information for material new loans and finance lease agreements which

includes finance costs profile as necessary. Request confirmation of balances payable

from lenders with whom there was a significant loan outstanding at the balance sheet

date or at any time during the period. Include in confirmation request, details of accrued

interest, security and repayment terms. For repayments of loans, vouch that repayments

are in accordance with loan agreements and vouch to approve documentation.

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Meanwhile, for loan drawdown in the period, have to check authorization to

minutes or other documentation and vouch to cash received records and bank statements

as well. Ensure it agrees details to loan agreements. Vouch issue costs to invoices and

other supporting documentation. For the debt was issued with net proceeds less than the

repayable amount, check that the interest amortization of the discount or premium is on

an acceptable basis and has been accurately calculated and the balance sheet/net asset

statement liability correspondingly increased.

Ascertain from management or trustees details of any covenants included in bank

loans or other debt agreements need to test compliance with debt covenants by agreeing

covenant details to loan agreements or permanent file. Discuss with management what

remedial action has been taken to deal with any non compliance and if necessary ask the

client to obtain a waiver from the lender in respect of any non compliance which could

accelerate debt repayment. To perform test on interest payable on loans by vouching

interest payable to supporting documentation and recalculating interest accrued.

For lease agreements, inspect for new finance leases incepting in the period,

check suitable authorization and confirm finance lease classification. Check that a

proper allocation of interest deferred to future periods has been made that the amount

capitalized is correct. For repayments of finance lease obligations, check that rental

payments are in accordance with the lease agreements and that payments have been

properly split between repayments of capital and interest.

SCHEDULE N - SHAREHOLDERS’ FUNDS

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This schedule will be prepared during performing statutory audit. First, verify

authorized share capital with the Memorandum of Association. Then, verify any change

in authorized share capital with minutes, relevant forms and special resolution.

Besides, verify issued share capital with previous balance sheet and latest annual

return. Other than that, verify the return of allotments with minutes, relevant forms and

resolution for additional allotments made during the period or year.

SCHEDULE P - PROFIT AND LOSS ACCOUNT

For this section, there are few items that compulsory to perform an audit. This is

due to the tax computation. By doing this, detailed information on taxable items easily

can be obtained from this schedule.

This schedule actually represents an operating costs which incurred by the

business. Generally, for all expenses, obtain an analysis of operating costs showing

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accounts included in the cost headings disclosed in the financial statements. Test the

mathematical accuracy and agree balances to the nominal ledger.

Obtain an analysis of employee costs analyzed by payroll cost, tax and pension

contributions. Test the mathematical accuracy and agree balances to the nominal ledger.

Obtain or prepare a monthly schedule of cost of sales and gross profit percentage

analyzed by department, location, segment or product. Compare with prior periods.

Explain significant or unexpected changes and trends. Be vigilant in particular for

evidence of unrecorded purchases or overstated stock or sales. For cost of sales in total or

by products or locations, estimation done by reference to the quantities of goods sold and

the average production cost.

Compare analyses of distribution costs and administrative expenses with prior

periods. Prepare a predictive estimate or proof in total of payroll costs of gross pay by

obtaining prior period payroll costs, the numbers of employees in the period year

including starters and leavers from Personnel Department and considering the effect of

pay rises and changes in the staff mix in the period. For a sample of employees included

on the payroll, check that the gross pay agrees to a contract of employment or subsequent

authorized amendments to pay rates. Compare with recorded payroll costs. Ensure

description of employee as either full time or part time is accurate.

Compare purchases by month with prior period. Explanation needed from the

client the reason for significant or unexpected changes and trends. For discounts allowed,

calculate as a percentage of sales and compare with prior periods, company policy and

credit control trends. For all operation categories, scan the nominal ledger accounts,

journals or transaction files and list major transactions which normally those in excess of

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adjusted materiality limit and unusual transactions which those that indicate an

accounting or disclosure matter. Examine documentary evidence underlying identified

major and unusual transactions to ascertain that underlying evidence supports the

recorded amount and description of the transaction. Ensure that revenue transactions are

recorded in the proper period, properly classified and recorded in accordance with

accepted accounting principles and the client's revenue recognition policy and cost of

sales transactions are recorded in the proper period and properly classified as well.

Besides, ensure other transactions are recorded in the proper period and in a

manner that properly matches revenue and expenses. Test a sample of purchases recorded

in the nominal ledger in the period and inspect authorized invoice by checking the

accounts classification and ensure that agree to other evidence of work done.

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SALES

Firstly, obtain an analysis of sales by location and product. Check the casts and

ensure it agrees to the nominal ledger. Besides, obtain a schedule of monthly, quarterly

or annual sales, value and quantities if available, analyzed by geographical area, market

and major product or major contracts and compare with prior periods. Review the

schedule taking into account business and consumer trends, product mix, technology,

new products, discontinued products, expansion etc.

Meanwhile, compare miscellaneous and cash sales by product and location with

prior periods. Calculate an estimate for sales based on total quantities of goods

dispatched in the period and known or average selling prices. Compare the calculation

with recorded sales and investigate any significant differences. Calculate the percentage

credit notes by value and quantity with sales and compare with prior periods.

Scan sales accounts in nominal ledger for evidence of unusual entries. Examine

supporting documentation in respect of unusual items detected. For a selected month,

check that the total number of sales invoices and dispatch notes issued have been, or can

be, properly reconciled. Test that a sample of dispatch notes have been properly

invoiced by checking to invoice details such as customer, quantity and price and

customer order.

To check the validity of credit notes issued in the period can be by vouching

credit notes recorded in sales to the credit note or examining valid supporting

documentation or inspecting evidence of authorization.

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SCHEDULE S – STATUTORY AUDIT

For this section, any important changes need to be noted. If the is any acquisition

of assets during the financial year, resolution regarding that matter need to be

photocopied. For an example change of bank signatories to current bank account, transfer

of securities, director’s remuneration, all the resolution regarding this matter need to be

photocopied. Besides, form of annual return as well as all the related form such as Form

49 also have to be photocopied for reference.

Three books that need to be referred are minute book, secretarial book and

register book. Firstly, go through the minute book. While extract the information, browse

through the minute content. Secondly, obtain all the latest dated forms from secretarial

book. Finally, reference made on register book to fill statutory programme.

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SCHEDULE T - TAXATION

Inspect tax file to ensure that all notices of assessment issued have been taken

into account. Ensure CP 204 and CP 204A if any, has been lodged as appropriate. Take

note of tax correspondence indicating where there is any tax dispute, tax investigation or

other abnormal events. Analyze outstanding tax balance and enquire why tax liability

has not been paid or where tax is overpaid.

If this is the first year accounts, enquire from client the date of commencement

of business. What is it based on whether invoices issued or received? Ensure that CP

204 been compiled with and submitted as appropriate. If the company first accounts do

not cover a full period of 12 months, ascertain the basis periods and the tax implications.

Impact of Deferred Tax on the Financial Statements - Quantify the amount and action

taken. Identify are there any payments made that are subject to withholding tax. If yes,

make sure withholding tax was reported accordingly to the tax authorities. Check RPGT

implication if there is any disposal of Tangible Fixed Assets.

For inter company transaction with related parties such as sales, payment and

loan transactions, specify whether transaction is within Malaysia or outside Malaysia.

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SCHEDULE V – CONCLUSION

The purpose of this schedule is to make a final review of the draft financial

statements to ensure their completeness, consistency and presentation. We have to state

whether the financial statements show a “true and fair” view or not and state that clean

report may be issued. If not, state the fact and reasons as to why the financial statements

should be qualified.

Besides, we can state any reasons that we wish to highlight to the reviewing

manager for his attention. Finally make reference to the appropriate schedules in the

working papers where applicable.

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DORMANT COMPANY

For dormant company, most of the schedules are not applicable. The procedures

for this type of company is confirm that the company has indeed been dormant. Then

ensure that unresolved items brought forward from previous year have been cleared.

Besides, obtain photocopies or extract of minutes of AGM, directors’ meetings

and EGMs if any. Ensure the trial balance agree to general ledger. Ensure the opening

balances of general ledger agree to previous year’s financial statements.

In addition, for share capital and statutory records, ensure that authorized share

capital agree to Memorandum of Association. Vouch movements in issued capital, if any

and obtain copy of returns on allotment. Finally sight statutory records, complete the

statutory registers checklist.

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AUDIT REPORT

The final stage in the auditing process is preparing the audit report, which is the

communication of the auditor’s findings to users. Audit journal entries have to be

prepared if the is any adjustments in accounts. We will prepare trial balance as for our

reference. After all this documents have been prepared, the audit file will be given to the

manager for review. The review notes given by the manager after he reviewed have to be

cleared.

After cleared all his review notes, the documentation can be prepared. The documentation

that needed to be prepared are:

Note of fees

Draft audited accounts

Two copies of audit journal entries

Twelve copies of the Director’s Report, Directors’ Statement and Statutory

Declaration

Register – Form 7

Letter of representative

Stock certificate

Cash in hand certificate

Certificate of directors’ remuneration and shareholdings

Bank confirmation

Confirmation of balance

Cover sheets, Tax cover letter, Form C and Form R

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5.0 TAX COMPUTATION

I was also placed in tax department and assigned for tax computation job. I had done tax

computation for companies. Tax computation means the working sheets, statements,

schedules, calculations and other supporting documents forming the basis upon which a

return is made and which are required to be submitted together with the return or

maintained.

A) The starting point of a computation is the profit before taxation shown in the

accounts. To this are added the following items which are disallowable or

disregarded for tax purposes:

Depreciation or amortization.

Capital losses, such as sale of fixed assets or other non-trading losses or expenses.

Professional fees relating to capital matters.

Expenditure of a capital nature. For an example additions, alterations and

improvements, included under repairs and maintenance.

Entertainment expenses other than entertainment provided for employees.

Expenses relating to provision of leave passages.

Donations to charities and other organizations.

Premiums of leases charged to profits.

General provisions for bad debts, retirement benefits, leave passages, exchange

losses, future expenditure.

Interest on overdue taxes.

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Interest relevant to unproductive loans and advances to officers and associates of

the company.

Interest on non-income producing investments.

Incorporation expenses in respect of authorized share capital in excess of

RM250,000.

Pre-trading expenses. For an example expenses incurred from date of

incorporation to date of commencement of business.

Receipts of a revenue nature credited to reserves.

Expenses relating to increase in authorized or issued capital.

Installation of equipment or assets.

Generally all expenses incurred not wholly and exclusively in the production of

income, such as remuneration including EPF contributions and other benefits

to partners and proprietors and basic expenses such as annual reports for

distribution to shareholders for annual general meetings and extraordinary

general meetings.

B) From the total of the above are deducted the following:

Income or gains which are of a capital nature. For an example profit on sale of

fixed assets.

Capital allowances

Unabsorbed business losses.

Donations to approved institutions.

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C) Certain expenses are deductible although for various accounting and commercial

reasons they may not have been charged to profit and loss account:

Renewals and replacements of items which do not qualify for capital allowances,

such as carpets, fire extinguishers.

Deferred expenditure. This would cover expenses incurred after the company has

commenced trading but because they have not yet contributed to generating

income they are not charged to profit and loss account instead they are carried

in the balance sheet as deferred expenditure or pre-operational expenditure.

Repairs and other allowable expenses charged directly to reserves.

D) There are also certain categories of payments, receipts and other points in a

company’s operations which need special treatment. These are:

Remittances from overseas. Income earned from sources outside Malaysia and

remitted is tax exempt.

Dividends received from exempt profits. For an example from a pioneer

company’s exempt income fund.

Allocation of expenses by a parent company to its subsidiaries.

E) Once the chargeable income and the tax thereon have been computed, the next

step will be:

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Tax deducted at source from Malaysian dividends or Malaysian source

interest. These deductions at source are at the rate of 28% and the set-off

merely cancels out the tax charged on the gross dividends or interest in the

upper limb of a computation.

Double tax relief. The double taxation agreements which Malaysia has

contracted with other countries provide the extent of credit that may set off in

this section of the computation.

5.1Computation of capital allowances.

5.1.1 Conditions for capital allowances.

To qualify for initial allowance in respect of plant and machinery

for a year of assessment, a person has to satisfy all the following

conditions:

He was carrying on a business during the basis period.

He has incurred qualifying plant expenditure in respect of

that asset during the basis period.

That asset was used for the purpose of the business.

At the end of the basis period or if the asset was disposed

of, at the time of disposal, he was the owner of the asset.

To qualify for annual allowance in respect of plant or machinery

for a year of assessment, a person has to satisfy all the following

conditions:

He was carrying on a business during the basis period.

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He had incurred qualifying plant expenditure in respect of

that asset.

That asset was used for the purpose of the business.

At the end of the basis period, he was the owner of the asset

and the asset was in use.

Qualifying plant expenditure means capital expenditure incurred

on the provision, construction or purchase of plant or machinery

used for the purpose of a business.

5.1.2 Claims for initial and annual allowances.

A) Claims to be made in the return and in writing.

Claims for Initial Allowance and Annual Allowance must be made

in writing in the return for the Year of Assessment. The details of

the claim should be shown in a certified statement in the tax

computation.

B) Conditions to be satisfied.

To qualify for Initial Allowance and or Annual Allowance for a

Year of Assessment in respect of an asset, the person making the

claim must satisfy all the following conditions:

He was carrying on a business during the basis period.

In respect of that asset, he has incurred Qualifying Expenditure

in that basis period to qualify for Initial Allowance or has

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incurred Qualifying Expenditure in that basis period and or a

previous basis period to qualify for Annual Allowance.

That asset was in use for the purpose of the business.

At the end of the basis period, he was the owner of the asset

and the asset was in use.

5.1.3 The general rates for capital allowances are as follows:

Asset Initial Allowance Annual Allowance

Rate Rate

Heavy machinery, motor vehicles 20% 20%

Plant and machinery 20% 14%

Others 20% 10%

Particulars relating to tax adjustments

a) In respect of each tax adjustment the basis for such adjustment should be

shown supported by analysis, copies of subsidiary accounts, receipts etc. as

appropriate.

b) In respect of incentives claimed copies of approval letter, pioneer certificate,

and exempt account should be attached.

c) In respect of bad debts written off which exceeding RM5,000 for companies

and RM1,000 for others, particulars of the debtor, nature of the debt and

reasons for writing off should be given.

d) In respect of capital allowances schedules to show additions, hire purchases,

disposals or write-off should be attached.

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Schedules that need to be prepared as supporting to a tax computation and

accounts are:

Fixed assets schedule which shows additions and disposals and a

reconciliation of opening and closing figures.

Profit reconciliation.

Sundry creditors and liabilities.

Provisions and reserves where shows additions and appropriations.

A reconciliation of the taxation account.

Repairs and maintenance where large numbers are involved a broad analysis

of expenses should be provided.

Legal expenses. Indicate the nature of each disbursement.

Subscriptions and donations. For donations, receipts supporting claims made

should be attached.

Travelling and transportation. Indicate the place visited and the purpose of

that visit. Identify whether that traveling and transportation relates to the

business purpose.

Investment income showing source, gross income and tax deducted at

source.

Property income showing income and non-income producing properties. For

an example rental income.

Tax treatment on income and expenses

5.2 Income

A) Commission income

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Commission by whatever name called which is calculated based on

brokerage charged on securities transacted through the remisier is to be

treated as business income and will be taxed under Section 4(a) of the

Income tax Act 1967.

B) Interest income on security deposit

Interest received by a remisier on his security deposit in the form of cash

places with the stockbroking company to make good against debts or

liabilities will be treated as business income and assessable under Section

4(a) of the Act as the deposit forms an essential part of the remisier’s

normal business.

5.2 Expenses

In general, all outgoing and expenses wholly and exclusively incurred in

the production of income are allowable as a deduction in arriving at the

adjusted income.

In respect of expenses claimed the following particulars have to be

furnished:

5.2.1 Contract or subcontract payments, commissions and rental and other

contractual payments to residents, excluding management fees.

Name, address, I/C No. and amount in respect of each recipient.

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Type or nature of contract or commission and location or nature of

asset rented.

5.2.2 Contract payments to non-residents.

Receipts by non-resident contractor.

Location, nature and duration of project.

Name, address, tax reference no., I/C no. of non-resident contractor

or the payer.

Total contract sum and the service portion thereof.

Contract sum and the service portion thereof payable / receivable

for the relevant basis period.

Particulars of withholding tax showing:

i) Date of paying or crediting of contract sum due.

ii) Date of payment and amount of withholding tax.

iii) Receipt numbers.

5.2.3 Management fees to residents.

Name, address, I/C no. and amount in respect of each recipient.

Indicate relationship with recipient, if any.

Basis for payment of fees supported by copy of management

agreement, if any.

5.2.4 Professional or technical or management fees and rents.

Name, address and amount in respect of the recipient.

Nature of services rendered.

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5.2.5 Overseas trips (not required for public companies).

Names and designations of persons involved.

Dates, destination and purpose of the trip.

5.2.6 Salaries or Commission

Name, I/C No. and address or recipient.

Amount paid and claimed.

Services performed by the recipient.

Details of expenditure, indicating non-business element.

5.2.7 Non-trade debtors and creditors.

There should be separate records for non-trade debtors and

creditors. For an example, persons owing money to the individual

or to whom the individual owes money which is not related to the

business.

5.2.8 Small expenses without receipts.

For small expenses for which no receipts are obtained. For an

example, taxi fares and parking fees, a record should be made as to

the date incurred, the amount paid, and the purpose for which the

expense is incurred.

5.2.9 Specific claims for deductions, allowances, reliefs and rebates refer to

claims which are required to be supported by documents such as

prescribed forms, certificates and receipts.

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Other than preparing tax computation, I was assigned to prepare letters to IRB.

Types of letters that I had prepared were appeal letters, request for refund of tax overpaid,

CP 204 and some other matter regarding tax.

Client can appeal if they are not satisfied with the manner in which their income

have been assessed, personal reliefs have not been appropriately given, forget to claim

certain expenses or reliefs or there is an error in the assessment issued by the IRB office.

Assessment of tax for employers

In general, employer means the party that pays remuneration to the employees,

where there is an “employer – employee” relationship. Due to this, that is the reason why

we have to attach the supporting documents for commissions paid, salaries paid and etc.

This is to ensure whether the amount received for the services rendered by the, for an

example, contractor reflect in his income computation. Examples of employer are

manager, agent or person responsible for the payment of salary or wages to an employee,

any body of persons whether or not statutory incorporated, for an example, an association

and Statutory Boards, Federal and State Governments.

Responsibilities of an employer

Furnish within 30 days a Return (Form E).

Notify the Director General in writing of a new employee.

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Notify the Director General in writing of an employee who is about to cease

employment except if the employee has tax deducted under the Schedular Tax

Deduction scheme and is not retiring from employment.

Notify the Director-General in writing of an employee who is about to leave

Malaysia for a period exceeding 3 months.

Withhold money payable to the employee who is about to cease employment or is

about to leave Malaysia for a period of more than 3 months. Deduct tax from the

remuneration as directed by the Collection Branch. With effect from 1 January 1995,

monthly tax deduction under the Schedular Tax Deduction Scheme.

Offences and Penalties imposed on employer if they failed to fulfill the

requirements. Failure to notify the Inland Revenue Board of the cessation of employment

and or the departure of an employee from Malaysia, the Director-General of Inland

Revenue is empowered to recover from the employer any tax due from the employee.

Failure to comply with any of the requirements will render an employer liable to

prosecution and on conviction, liable to a fine of not less than RM 200.00 and not more

than RM 2,000.00 or to imprisonment for a term not exceeding six months or to both.

Failure to deduct and / or remit monthly tax deduction of employees' by the 10th. of

the following month is an offence and upon conviction, an employer can be fined up to

RM1,000 or jailed up to 6 months or both.

Payment of tax

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Under formal assessment, tax shall be paid within 30 days from the date of the

Notice of Assessment notwithstanding any appeal or disagreement with the tax assessed.

Under self assessment system, tax shall be paid on or before the stipulated due date. In

certain circumstances an extension of time may be allowed, for example, where the

taxpayer is away from the country. There are cases where payment is required to be made

within 7 days from date of the notice of assessment. For example, where a person has a

non-resident employer and is likely to leave Malaysia at short notice.

Installment scheme for company

Under the Self Assessment System, every company is required to furnish an

estimate of its tax payable for a year of assessment. This has to be done not later than 30

days before the beginning of the basis period.

In respect of a company that has just commenced operation, the estimate of tax

payable for the current year may be furnish within 3 months from the date of

commencement of operation. The estimate of the tax payable for the current year of

assessment should not be less than the estimate of tax to be paid for the immediate

preceding year of assessment.

Payment by installment

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The estimated tax payable has to be paid in equal monthly installments beginning

from the second month of the basis period for a year of assessment.

For an example:

Number of months in basis period = 12 months

Estimated tax payable = RM 24,000

Monthly installment = RM 2,000

Each installment is payable by the 10th of the month. Similarly, for new tax

payers, installment payments must commence in the sixth month of the basis period for

the year of assessment i.e. payable in the sixth month after the tax payer commence

operation. All payments of tax to the IRBM must be made using the Remittance Slip (CP

207). Tax payer is required to indicate the Year of Assessment that the payment is made

for on the remittance slip. Tax shall be paid within 30 days from the date of the Notice of

Assessment notwithstanding any appeal or disagreement with the tax assessed. An

increase of 10% tax will be imposed upon failure to pay the tax within 30 days from the

date of Notice of Assessment issued. If tax is not paid for the next 60 days from the date

of imposition of 10% increase in tax, a further increase of 5% will be imposed on the

outstanding tax after the expiration of the 60 days.

Tax payment – payment through bank

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Payment by cash, cheque, debit account or telegraphic transfer may be made at

any branch of Bumiputra-Commerce Bank Berhad (BCBB). This facility is available for

companies and individual taxpayers. Type of tax that can be made at BCBB are Income

Tax (Instalment Scheme and non-Instalment Scheme) and Real Property Gains Tax

(RPGT). An Income Tax Payment Slip which available at the BCBB branch must be

completed when making payment at the bank. A copy of the slip should be retained as

proof of payment.

The IRB will not issue official receipts for payments made at the bank.

All cheques, bank draft, postal order, or money order must be crossed and paid to

DIRECTOR GENERAL OF INLAND REVENUE, and if mailed, addressed to relevant

Collection Branch. The relevant income tax reference number, identity card number, full

name, current address and the relevant year of assessment must be written on reverse side

of the cheque, bank draft, postal order or money order.

The type of tax payable whether Income Tax or Real Property Gains Tax must be

clearly indicated. Cash payment at payment counters must be accompanied by

Remittance Form (CP 153). Official receipts will be issued for payments made at the

payment counter or through the post.

Refund of tax overpaid

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An application for refund shall be in writing and the letter stating full name,

income tax reference number and latest address must be sent to the relevant Collection

Branch. For companies, the bank account number must be stated. A refund will only be

made after the required verifications have been completed.

Self Assessment System for Company

From the year 2001, the Self Assessment System introduced for companies.

Under this system, companies are required to determine their own tax liability and make

payment to the IRB. Companies have to maintain a good record keeping system. This

will help in verifying any claims made should the IRB require them to be produced.

Taxpayers have to determine their correct tax liability and make payments promptly. That

does not mean that the IRB would not examine the return forms at all. A certain

percentage of the return forms will be audited. It is very likely that IRB will audit those

returns with a high probability of under declaration of taxable income or tax payable and

those that are inherently of high risks to revenue.

All companies are required to furnish to the DGIR an estimate of its tax payable

for a year of assessment. This includes companies that expect no tax to be paid for that

year of Assessment. Under the Self Assessment System, every company is required to

furnish an estimate of its tax payable in a prescribed form (CP 204) to IRB. This

prescribed form has to be submitted to IRB not later than 30 days before the beginning of

the basis period. However, in respect of a company that has just commenced operations,

the estimate of tax payable for the current year may be furnishing within 3 months from

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the date of commencement of operations. The prescribed form for furnishing an estimate

will be issued by IRB to companies. In the event that companies did not receive the form,

these forms are also available at all IRB offices. Upon completion of CP 204, it should be

sent back to Inland Revenue Board, Pusat Pemprosesan (Bahagian Operasi) Karung

Berkunci 11055, 50990 Kuala Lumpur.

In general, the following information is required:

Name and address of the company.

Income tax file reference number.

Company registration number.

Indication of whether original or revised estimate.

Accounting period.

Date of commencement of operation for new companies.

The relevant year of assessment.

The estimated amount of tax payable for the year of assessment.

Generally, the estimate of the tax payable for a current year by the company should

not be less than the estimate of tax to be paid for the immediate preceding year of

assessment. Notwithstanding the above, it is specifically provided that for the Year of

Assessment 2007, the estimate of tax payable furnished to the Director General of Inland

Revenue (DGIR) shall not be less than the amount of tax payable for the Year of

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Assessment 2006. Upon receiving the completed CP 204 furnished by the company, IRB

will then issue Notice of Installment Payment (CP205).

The company is allowed to revise its original estimate as furnishing, in the sixth

month of the basis period for a year of assessment. Following from this, the remaining

installments have to be revised accordingly. The application for revision can be done

using the same prescribed form (CP204) but indicating that it is to provide a "revised

estimate". A Notice of Revised Installment Payment (CP206) will be issued by IRB to

confirm installment payments following the revised estimate.

Penalty for Understatement of the Estimated Tax Payable will be imposed if the

difference between the actual tax payable and the revised Estimated tax payable or the

estimated tax payable (if not revised Estimate is furnished) is more than 30 % of the

actual tax payable, a 10% increase in tax will be imposed on that difference in excess of

the 30%.

Formula for calculating the penalty

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The formula for calculating the amount of tax to be increased is as follows:

Amount of tax to be increased = {(AT-ET) – (30% x AT)} x 10%

AT is actual tax payable

ET is revised estimated tax payable or estimated tax payable and if no revised estimate is

furnished.

If a company fails to furnish an estimate by the required date, the DGIR will issue

a direction to the company to make installment payment. The DGIR may also institute

legal proceeding against the company for the failure to furnish an estimate.

Accounts Year Ending

Estimate Furnished to IRB before:

Variation of Estimate in Month of:

Commencement of Monthly Installments

31/01/2007 01/01/2006 July 2006 March 200628/02/2007 01/02/2006 August 2006 April 200631/03/2007 01/03/2006 September 2006 May 200630/04/2007 01/04/2006 October 2006 June 200631/05/2007 01/05/2006 November 2006 July 200630/06/2007 01/06/2006 December 2006 August 200631/07/2007 01/07/2006 January 2007 September 200631/08/2007 01/08/2006 February 2007 October 200630/09/2007 01/09/2006 March 2007 November 200631/10/2007 01/10/2006 April 2007 December 200630/11/2007 01/11/2006 May 2007 January 200731/12/2007 01/12/2006 June 2007 February 2007

Table 2.0 Installment Schedule

Under the self assessment system, companies are required to estimate their own

tax payable for a year of assessment and make payment by installments. Companies are

also required to furnish to the DGIR a return specifying the chargeable income and the

tax payable on that chargeable income and also any other information as required. When

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a return is furnished, the DGIR is deemed to have made an assessment on the day the

return is furnished. If the total amount of the installment payments is less than the actual

tax payable, the difference has to be paid not later than the last of the sixth month from

the date following the close of the accounting period.

When making payments to the IRB following items

are indicated:

Name and address of the company

Tax reference number

Year of assessment

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Month for which installment is paid

This is necessary to help us match the total installment payments that have been

made against the actual liability. A company is required to pay the estimate of tax by the

tenth day every month in equal monthly installments, beginning from the second month

in the basis period for a year of assessment. Similarly, for a new company, the payment

shall be made by the tent day of every month in equal monthly installment beginning

from sixth month of the basis period.

If tax payable of the company exceeds the revised estimate or estimate, if no

revised estimate is furnished by an amount of more than 30% of the tax payable, a 10%

increase of tax will be imposed on the difference between that amount and 30% of the tax

payable.

Form C

IRB will still send the return form based on records available. Return forms will

be issued quarterly based on the companies' accounting period. Companies should receive

the return form at least 3 months before the date of submission of Return Form. The

submission of Return Form is due within 6 months after the close of the accounting

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period. Companies that did not receive any Return Form must contact the nearest tax

office. A new Form C will be designed to facilitate all companies to complete and

compute their tax .

This form will be accompanied by explanatory notes on how to fill the form. The

submission of a complete return should be made within 6 months after the close of the

accounting period which constitute the basis period for the year of assessment. However,

each company is encouraged to complete the Return Form C early does not mean that the

company has to pay the last payment early. The last payment in respect of the balance of

tax payable, if any is required to be made by the due date, for an example the last day of

the sixth month from the date following the close of the accounting period. If a company

fails to submit Return Form C, the company would have committed an offence. A fine of

not less than RM200 and not more than RM2,000 or imprisonment not exceeding 6

months or to both will be imposed.

When IRB receives the Return Form C, IRB will check if there are any obvious

mistake, for example, arithmetical error or wrong transcription. If such errors are detected

the company will be informed. However, if a Return Form is incomplete, IRB will reject

the Return Form and send it back for completion. Upon completion, the company will

then furnish the complete return to IRB. IRB may select any case for audit. By this,

queries will be raised on entries in the Return Form, Accounts or tax computation.

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6.0 DISCUSSION, ANALYSIS AND FINDINGS

WITH REGARD USEFULNESS OF THE

TRAINING

My practical training at CPL & CO was very beneficial because it has exposed me

to the many sectors of the accounting profession. The department that I was attached are

auditing and accounting. They assigned me with many tasks which related to auditing and

taxation.

I had done a full set of accounts where at first I found many problems due to lack

of information. But finally I managed to complete the account. Here I learned a lot on

double entries. I did not use any software to do that accounts. I had done that by

manually. I really had a hard time of doing that.

The first day of my practical, I was given a task to start my audit job. Two boxes

of documents were given to me. At that point of time, I am really blur because do not

know where to start and how to start. All of my seniors are not around because they went

to client’s office. That time there is only one senior who I appreciated till now helped me

to perform audit schedule by schedule. She taught me in detail how to overcome the

problems faced for each schedule. My manager always expects me to learn by myself. At

first was really hard for me to learn by myself but day by day I tried to learn by myself.

Not really depend on my seniors. Normally I will ask many questions to my seniors. This

really helped me to learn more beyond what the procedures says.

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For taxation, my manager had taught me how to do taxation for companies.

Actually in audit department itself we will do the tax computation for the company that

we are auditing. Normally the tax department staffs will be preparing Form C and Form

R and the letters that to be sent to IRB. Tax manager will review the tax computation and

will ask to do amendment if any. After I shifted to tax department, I really can know all

the scope in tax computation. Tax computation is really interesting compared to auditing.

This training is really good for me to learn more than what I studied in the

university. After went to training, now I really learnt what is accounting actually.

Taxation is the most I hate when studying that subject. But after trained in tax

department, now I really like taxation subject.

What we studied in university is really helpful when we enter to working life. The

thing is we really do not appreciate the information brought by the subject when we are

studying. We tend to forget what we studied. When enter to working life, all those

information become useful for us to implement.

7.0 LIMITATIONS OF TRAINING

This was basically my first real job as an accountant and frankly speaking I am

traumatized by the way the bosses were acting with the employees at the firm. Basically

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in that firm only four staffs are working for a quite some time. Other employees are

temporarily working there.

I had investigated why new employee can’t work there even for a week. The

reason I found out was the behavior of the employer towards employee. I was surprised

how I could work even they pressured me to the maximum. This sort of environment was

not exactly the best working environment.

I decided not to give up that easily and at the same time I challenged to myself to

complete my training in that firm.. They did not understand the fact that the whole

reason, I was there to learn and they were also aware that I was fresh from university and

had no prior job experience.

In my point of view, the main limitation of the firm is lack of other races as their

employees in that firm. They have to hire more employees of other races. By doing this,

the understanding of different culture will be strengthened. During my first meeting with

audit staffs, the meeting was handled in English for only in five minutes time. For the rest

of meeting was conducted in Chinese. They don’t even bother that I am a new trainee

over there who attended that meeting too. An ethical issue is very important nowadays.

As a working staff, we should know how to behave with our employees. By having a

good ethics, it will mirror a good perception of the firm to the public.

Trainees or new employee who is fresh graduate should be guided before they

perform an audit job. by giving guideline, they able to cope up very easily instead let

them to learn by themselves. These are some of the important issues that I would like to

raise here.

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8.0 SCOPE FOR FUTURE TRAINING IN THE FIRM TO DO 3 YEARS PRACTICAL TRAINING IN THE FIRM TO BECOME A MEMBER OF MALAYSIAN INSTITUTE OF ACCOUNTANTS (MIA)

It is proposed that before an individual can assume the role of professional they

should first qualify as a professional accountant, hold an undergraduate degree and have

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the additional knowledge, skills, practical experience, professional values, ethics and

attitude. There are 3 categories of membership in MIA:-

Chartered Accountant

Licensed Accountant

Associate member

In Malaysia, the word "Accountant" is protected. This is provided for under

provisions of the Accountants Act 1967 which state that no one can hold himself out or

practice as an accountant unless he is registered as a member of MIA. So, to become one

of the members, I have to obtain not less than 3 years relevant practical working

experience in areas related to accounting. One of the best places to get such experience is

in one of the audit firms. To be an accountant, we need critical and analytical skills plus

the ability to work independently. We also need to be able to work in a team and

communicate effectively. Accountants usually have their busy periods so we need to

know how to manage my time properly to meet deadlines.

Three years working experience is not a long period because the work that given

by them, have to finished on time and I think in performing the job, also need a high

efficiency and effectiveness in carrying the task especially doing accounts and audit

clients accounts. The practical experience part of the qualifying process is intended to

facilitate the development and direct application of professional knowledge, professional

skills and professional values, ethics and attitudes.

The three months practical training was only an introduction to see and have

experience in conducting the task given by them. The really have the clear picture what is

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auditing, as an accountant we have to work in audit firm at least for three years so that we

can equip ourselves with betterment of knowledge.

9.0 CONCLUSIONS AND RECOMMENDATIONS

I had gained so much of knowledge and experience during my industrial training.

I had learnt how to handle and solve a difficult task that given to me. My knowledge in

auditing and taxation is better now before I worked as a trainee. I applied whatever I

studied theoretically into practically. Now I have the ability to prepare a full set of

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accounts for a company. After I had done accounts, I think it is very easy to conduct

audit. Audit is basically the process of testing the accounts and who better to perform this

than a person with the full knowledge of handling a full set of accounts.

Think efficiently and effectively are the most important when I was in this area.

Communications with the clients teach me to become more mature so that I will have the

confidence when explaining something which relates to any matters. Besides, my public

relations skills improved because during the three months I was give so many

opportunities to correspond with clients and other stakeholders of the firm as well as

stake holders of the clients.

By the way, I had faced problems with my colleagues in the sense of

miscommunication between us. They will not listen to what I’m trying to say. There are

few situations that I came across when what I said was correct and what they said was

wrong. I received the pressure to the maximum. At first, I can’t stand with my colleagues

but that make me to take the first step to prove to them that I can work in such

environment. I have also learned how handle job pressure, although I have to admit I did

almost give up but I developed a self motivation skill within me which helped me push

on.

As my recommendation, it is good for the fresh graduates to gain knowledge and

experience in any audit firm. Accounting is part of a professional job which has to be

patience and have to gain more knowledge to be an efficient and effective accountant in

the future undertaking.

For the staff in the firm, I think that they should accept the trainee’s opinion. Not

all the time, the trainees can make a mistake. Let them to learn from the mistakes that

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they have done. Do encourage them so that in future they will decide to work in the audit

firm.

Communication plays the important role in our daily routine. A more efficient

vertical communication would definitely help in providing more effective guidance to the

staff. On the other hand, the management in the firm must not overlook the needs to

ensure each the employee is equipped with sufficient tools and supports to carry out their

works efficiently.

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