Causes of Accounting Scandal

1.      Low internal control

Now let's us picture as if we are in a exam hall, if the invigilator doesn't perform their well enough, high chances the candidates will having malpractice right? So in accounting scandal the situation is the same but just venue change, employees will conduct frauds if the internal control is weak or absent. Besides, if the superior management themselves shows negative or careless attitudes no doubt the junior will imitate and practice fraud .

2.      Greedy-ness

As human being , if they are money minded and chasing for materialistic , the current income resources for them will never be enough .So ,if opportunity given for a “fast buck ”, no doubt they will take the risk and create frauds. So, as advice, never ever put a money servant as the one whom responsible for the money.

3.       Creating profitable image of company

To having more investor, the company need to show and promise for a good returns .But, what if the company is making losses instead of profit? And this is where causes creative accounting happened where the company overstated their assets and revenue to mislead the investors think that the company is gaining lot of revenue.

4.      Pressure given from superior management

This occurs commonly for trading company when the superior set impossible sales targets that stress out the employees which may lead fraud happens.

Challenge faced by accounting student now day

Now being a students it doesn't easy you need to face the stress come from your studies and examination or it even worst if you having BAD lecturer. But what I can tell you is that it is way more worst when you are graduated when your lucky faded away.

You need to face dozens of challenges and difficulties until you get employed. And being an accounting graduate your challenge might be:

1.       Technology of accounting

 No doubt that Technology advance make our life easier but so how it also replace our roles. In accounting industry, many accounting software and program are introduced to the market and are mostly applied. Now days every firm are using multimedia for recording the business transaction due to it is more efficiency, low cost and save time. Thus, these causes some of the firm decides to cut down the number of accountant in the business but replace them with available accounting software with the reason that using technology products is way more cheaper than hire an accountant.

2.      Too much competition

Now days there are too much student are taking accounting major in both diploma and degree. This is because being an accounting graduate are easier to find a comfortable work and stable salary compare to other industry. However, in real world, a company only need 5 to 10 of accountant in their department and this cause the other dozens of graduates being unemployed even with a diploma or degree certificate. Furthermore, now day even though  some graduates are having qualified certificate but they are not "material in accounting firm" which means they just think to get paid and work to being as accountant but does not have the real accounting knowledge.

3.      What we learned in college vs what we will used in office 

 Now, this issue is not just happening in accounting sector but every of them where most of the students are still learning outdated or unpractical knowledge in the class. This cause the graduate being categorized as unqualified because they might score well in their exam but if it comes to real practical application they know nothing. It may be challenging for graduates who are entering the work force because they need to learn again by themselves about what really apply in the real accounting world sometimes, even they willing to learn but unfortunately not all the seniors can be a good "teacher " for them, well some might be generous to share what they know but some are so selfish that they rather to keep all the knowledge themselves.

Impact of Brexit in UK

Brexit

Brexit is the United Kingdom leave the European Union with the referendum on 23 June 2016, 51.9% of the participating voted to leave the EU. On 29 March 2017, the British government invoked Article 50 of the Treaty on the European Union. The UK is leaving the EU on 29 March 2019.

1.      The impact on economy of UK

The bank of England will raise the interest rates in order to curb inflation. The pound's sharp drop 9.5%, it may make the import to the UK more expensive. The squeeze on living standards was become worse due to the increased cost of importing fuel, clothes and food, the inflation is rising up to 2.9% from 2.6%. Now the currency exchange rate for pound to RM is 1: 5.52.

2.       Trade and manufacturing

Before the Brexit, UK is the biggest trading link in EU and trade freely because UK has a free trade agreement with EU. This agreement state that UK is 63% of Britain's goods exports are linked to EU membership. But now after Brexit, the exporter of UK will face some additional cost, such as complying with EU's rules of origin

3.      Crisis to investor

As British is under a risky and unstable economy stage after exit the EU , all the share and investment would also be affected as it is not looking promising at this point . Thus, most of the share or investment holder in British may incurred huge losses while minority of them might view brexit as an opportunity and received gain.

Tracing Vs Vouching

“Tracing and vouching, if you learning financial auditing then they will absolutely look familiar right?”

Now, we all know that each and every business transaction occurred in the organization must be recorded in their accounting record where the accountant will make sure that all the raw data in source documents been transferred to related financial statement are shown with the same amount. For auditor, they will look it as evidence to test and see the existence and completeness of every transaction. Thus, this will show you the summary of both tracing and vouching are totally a different thing from another.

Source Documents

Financial Statement

          TRACING

                   

Tracing can know the act that we matching the source documents which contain the accounting transactions with the journal or ledger that contained the transaction. Reason to perform tracing is where when the auditor has concerns that the client has understated their liabilities or expenses. where in their balance sheet they might have material and liabilities understated and unrecorded expenses in their income statement. So, auditor will performing test by tracing up the transaction from the client’s supporting document to the financial statement to check the completeness of this particular transaction. In other word, the flow of tracing procedure would be from source documents up to financial statement.

VOUCHING

Vouching in other hand known as the act we selecting an item to test from accounting records (journal / ledger) first then only examine the supportive source documents. Reason to perform vouching is where when the auditor has concerns that the client has overstated their asset or revenue. Where in their balance sheet they might have overstated the assets and overstated their revenue in income statement. So, auditor will performing test by vouching down the transaction from the client’s financial statement to the supporting document to check the existence of this particular transaction. In other word, the flow of vouching procedure would be from financial statement down to source documents.

Budget 2018 of Malaysia (comment)

The release of the Budget 2018 Malaysia have bring most of the citizen (especially civil servants) joys 😄as we received tax deduction and reduction, higher amount of BR1M ,tax free travel spot, plus other benefits and that's is very good of most of us. However, in my opinion, we shouldn't bring our expectations and satisfaction that high towards it because what we gain now it is a short term happiness. 

Now, I not saying that this budget is bad but it can be better as it's not perfect enough to cover and fix the current economic issues. After about 2 hours of noting down what the important part of the Budget 2018 is delivering, what I can conclude is that it "spends to much ". By referencing to the Rm 685.1billions of Malaysia national debt amount, the budget 2018 should be consider and emphasis on how it can cut down the Government spending to reduce gigantic amount of national debt 💸. Because when it spend too much, it just going to worsen the national debt until it reach a hazardous level💹. 

First, with the amount of Rm10millions to acquire public bus 🚌and taxi 🚕, the government should separate the partial amount to consider of building more highways or expanding the current ones cause for my experiences as a resident near the city center, what we need is more roads and highways not more public transportation to worsen the current congested traffic 🚥. Without any doubt, having Public transportation is good to the citizens but the number of it should be well planned in order to bring benefits to citizens and not burdens of traffic problems🚗🚙🚐🚚🚛. 

Second, with the 4.3 inflation rate (Sep 2017) standing currently ,government should really need to focus on how to lower it down. Government should repeal the consumer taxes instead of reduce the income tax amount because the reason of middle class citizens having low purchasing power💰 is not due to their personal income tax but the consumer tax on what they will incurred directly upon purchasing 🔖.The RM1200 of BRIM might be help to ease the issue but it is just a temporary solution, only the abolition or reduction of consumer tax and GST will really solve the issue from the root. 

Third, as still being a student, me myself most focus on what education benefits the Budget 2018 will bring me. Being notified that starting January 2018 all the reading materials will be tax free, it joy😆 me up of course. However in the view of encouraging our younger generation to read more, government should transfer this tax free benefit more on the academic or curriculum based reading materials🏫 because only this kind of material will bring inspiration and boost up the knowledge for our youth. Beside, noticing that nowadays technology📡play well role in our digital age💻, thus the government had increase the recognition for technological sector and encourage more youngsters to enroll into it. But, to lead the country towards 2020 standard, government should emphasis on not just the curriculum improvements but more on the student's behavior and thinking， I mean mentally growth. Unfortunately, frankly speaking, most of the students now day really don't qualified with what the work force standard required compared to old days as youngsters now day are born well in a war free and comfort era, they didn't know how hard is it people want to be educated and employed in the hardship tough life so they never appreciate what they having now. Unlike now day technology are so advanced and studying can be so easy compare to those generations that without GOOGLE. So back to the point, the government really needs to fix this issue by introducing more programs designed to let our youth to become a healthy spiritual and mature minded person in order to bring the nation to a next level. 

Above what have listed, it is just my personal thoughts 💭 about the Budget 2018, not intentionally creating any offences to any bodies ☺. 

Business risk Vs Audit risk

Business Risk	VS	Audit Risk
Is a risk that a company cannot generate adequate income to cover the expenses and that could hinder the hinder the achievement of company goals and objectives.	Definition	Is a risk that an auditor giving opinion based on financial statement which is inappropriate.
·         Strategic Risk          ·         Financial Risk          ·         Operational Risk          ·         Reputation Risk	Type of Risk	·         Inherent Risk ·         Control Risk ·         Detection Risk
Identify by management	Responsible Personal for Risk Identification	Identify by internal and external auditor
Review continuously due to its recurring nature.	Review of risk	Review at the time of preparing audit reports.

Business Risk

1.    Strategic Risk

·         Totally is making poor business decisions that affect the core of business activity. Change in customer tastes and preferences are the main strategic risk businesses can face which makes the company’s products and services obsolete or less desirable.

2.    Financial Risk

·         Poor in fund management which regarding on cash deficits, granting credit periods to customers, obtaining credit periods from suppliers, and  company's cash flow cannot  meet its financial obligations.

3.    Operational Risk

·         Can be result in internal event or external event inefficiencies and failures in the production floor. Internal event such as production delays, breakdowns in internal procedures, people and systems. For the external event such as supplier delays in delivering raw materials.

4.    Reputation Risk

·         This is the risk resulting from loss of image of the company through customer complaints, negative publicity, and product failures.

Audit Risk

1.    Inherent Risk

·         Is the risk of a material misstatement in the financial statements arising which error or omission as a result of factors other than the failure of controls. Inherent risks occur when transactions are complex, or in situations that require a high degree of judgment in regards to financial estimates.

2.    Control Risk

·         Is the risk of materially misstating in the financial statements caused by the lack of or failing of relevant controls in operations of the business. Internal controls and checks and balances must be in place to prevent and alert issues of error or fraud. Control risk will arise when the internal controls are not adequate.

3.    Detection Risk

·         Is the risk that auditor fail to detect material misstatements relating to an assertion in an entity's financial statements through substantive tests and analysis. Detection risk can be reduced by auditors by increasing the number of sampled transactions for detailed testing.

External Auditor vs Internal Auditor

“check ... ✔.... check and ✔”this is or probably what will sound like when those auditors doing their task.

For me , initially when talking about auditor I always thought 💭 that auditor is those who are always checking🔍and investigating📃 the accountants' works which made the accountant's life more miserable. I never knew that there are 2 type of auditors until my lecturer told me so😂 which is Internal auditor and external auditor. So to differential both of them ,this is what I get when I done my research （thanks GOOGLE！🙌）

Internal  Auditor	VS	External Auditor
Examine issues of company business practises and risks.	OBJECTIVE	Examine the financial records and issue an opinion based on the financial statements of the company.
Hired by the company management	APPOINTMENT	Hired by the shareholder of company
NO	CPA REQUIREMENT	YES
Company Management	RESPONSIBLE FOR	Company Shareholder
Free to use any type format	FORMAT OF REPORT	Must use specific formats
From operation by professionalism and status	INDEPENDENCE	From company via statutory rights
Continuous Process	PERIOD	quarterly or annual
Operational Efficiency	CHECK	Accuracy and Validity of Financial Statement
Salary	REWARD	Fee
No	RIGHT OF MEETING WITH SHAREHOLDER	Yes

So to cut it short , we can conclude that internal auditor is like those who patrol 🚓 in the organization to supervise all employees whether they obey and follow the company's rules and regulations (AKA just like a 24 hours CCTV📹that 👀 every single corners in company🏢). Meanwhile, an external auditor is a outsider from the company where been hired as inspector🔍and detective👮 to check and verify the company financial report plus detecting whether is there any possible fraudulent activities been occur or not.