a) Your clients:

i.

Sales

ii.

Profit after Tax

iii.

Cash Flow from Operating Activities

iv.

Total Assets

b) What are your clients products?

c) Who are your clients competitors?

d) Who are your clients customers?

e) Who are your clients suppliers? f) How does your client market and distribute its products?

Alcoms marketing and distributions of products are based on their branding recognition for their quality, reliability and product innovation (Abu Bakar, 2009). This allowed Alcom to widen their market reach as well as to retain customer loyalty by seeking to excel in services level (Annual Report, 2011). Alcoms good reputation among most multinational air-conditioner manufacturers had led to the increase of customer base and entrance of new markets especially overseas. This had led to the increased of shipment and exports to markets in Southeast Asia, Japan, Korea, Hong Kong, Australia, Middle East and Africa over the past few years (Abu Bakar, 2009). g) What is your clients basic business strategy?

h) What are critical business processes for your client given its basic business strategy? The critical business processes of Alcom based on its strategy would be the purchasing/manufacturing process and human resource management process. It is believed that sustained operational excellence must be grounded in a stable and effective process management system to maximise value (Alcom, 2011). The operational efficiency will be indeed a challenge in the manufacturing process as Alcom is a manufacturing company. Moreover, Alcom also recognize and harness the full potential of the employees as people development and engagement is also one of their foundations in the business. Alcom is also widely

recognised for its products quality and standards which can be achieved through the manufacturing process capability (The Star, 2009). Alcom focuses on continuous improvements to their purchasing process and manufacturing process as Alcoms capital expenditure is spent in upgrading and projects that would enhance productivity and efficiency (Adnan, 2009). Purchasing raw materials for a manufacturing company is a necessity. Therefore, Alcom also spend time and effort to manage the inventory and receivables for an effective cash flow (Adnan and Mahalingam, 2009). Thus, this indicates some form of emphasis on the inventory management process, financing process and revenue process. i) What accounting information is associated with the critical business processes and how does your client measure up in that information?

Fixed Assets Turnover

Inventory Turnover

Account Receivable Turnover (Days)

Account Payable Turnover (Days)

Gross Profit Margin

i)

What accounting methods does your client use to report the accounting information associated with critical business processes and what is the risk of material misstatement?

The following accounting policies have been used consistently in reporting information associated with critical business processes:
i.

Basis of preparation

The financial statements of ALCOM have been prepared in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act 1965 and have been prepared under the historical cost convention. It requires the use of certain critical accounting estimates and assumptions. Thus, Directors have to exercise their judgement in the process of applying the Groups accounting policies. These estimates and judgements are based on historical experience and expectations of future events. The risk could be that Directors may estimate and project their judgments wrongly. Besides, the Directors do not foresee the estimate and assumptions

used will have any significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

ii. Property, Plant and Equipment

Property, plant and equipment are initially stated at cost less accumulated depreciation and impairment losses. Buildings are subsequently shown at fair value, less subsequent depreciation and impairment losses. The valuation of these buildings has not been updated. Cost includes expenditure that is directly attributable to the acquisition of the assets. The risk is the value of property, plant and equipment may not reflect the current market value. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statements of comprehensive income during the year in which they are incurred. Leasehold land is amortised over the tenure of the lease of 99 years. Other property, plant and equipment are depreciated on the straight-line basis. Projects-in-progress are not depreciated until their completion. Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each financial year end. No revision in the estimates was made by the Group at statement of financial position date, as none were deemed necessary.
iii. Inventories

Inventories, which include spares and operating supplies, raw materials, work-inprogress, supplies and finished goods are stated at the lower of cost and net realisable value. Cost is determined using the weighted average basis.

Allowance for inventory write-down was made, but possibly inappropriately estimated.
iv. Trade receivables

Trade receivables are amounts due from customers from sale of aluminium products in the ordinary course of business. Debt collection period is expected to be one year or less. However, no allowance for impairment has been made in respect of trade receivables in the current and previous financial year.

v. Foreign currencies

(a) Functional and presentation currency Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in Ringgit Malaysia, which is the Groups functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of comprehensive income.
vi. Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Groups activities. The Group recognises revenue when the amount of revenue can be reliably measured but there may be risky revenue involved due to accrual basis.