Normah Omar

Procurement Issues in Malaysia

Purpose- This study was undertaken with the aim of surveying the perception of the two main stakeholders in procurement system; the contractors and the procurement officers on issues such as accountability, transparency, corruption, integrity and cronyism pertaining to the public procurement system in Malaysia. Design/methodology/approach- Interviews were conducted over a nine-month period in 2007 to gauge the perception of the procurement officers and contractors on procurement issues in Malaysia. The interview data were then transcribed and grouped according to six main themes; transparency, procurement policies and procedures and its implementation, personnel involved in the procurement system, estimation/budget/pricing, professionalism and ethics and timeliness. Findings- One of the common complaints made by the contractors was prevalence of interference from outside parties and cronyism, which affects the awarding of contracts. The procurement officers were blamed for malpractice and non compliance to the policies and procedures of the procurement system. Practical implications- The paper deals with sensitive issues and takes several months to successfully gather respondents who willing to give feedback on their experience with the procurement system. The data are first hand information and are carefully transcribed and categorized into categories to help better understanding of the issues raised by the respondents. Originality/value- The paper deals with sensitive issues and takes several months to successfully gather respondents who willing to give feedback on their experience with the procurement system. The data are first hand information and are carefully transcribed and categorized into categories to help better understanding of the issues raised by the respondents and the private sector.

Empirical evidence on the risk management tools practised in Islamic and conventional banks

Purpose - The paper aims to gain an insight into the risk management tools practised in Islamic and commercial banks in Malaysia, and selected Islamic banks outside Malaysia. The study also examines the level of adequacy of risk management tools and systems of these banks. Design/methodology/approach - The study employs primary data collected using a questionnaire survey. Findings - There are significant differences in the level of extensiveness of the usage of market value at risk (VaR), usage of stress testing results, the usage of credit risk mitigation methods and also the level of extensiveness of the usage of operational risk management tools between Islamic and conventional banks. The findings further show that risk management tools and systems for Islamic banking are inadequate, particularly in the critical areas of “IT professionals with relevant expertise in process integration and risk analytics”, “IT systems to cater for each Islamic instrument” and also the “capacity of human capital in the highly technical areas of risk measurement.” This implies that more innovations and product developments are needed for Islamic banking in managing risks. Originality/value - Since there are relatively few studies conducted in this area, specifically among Islamic banks in Malaysia, this study will broaden the scope of the literature by providing novel empirical evidence.

Financial Statement Fraud: A Case Examination Using Beneish Model and Ratio Analysis

 Abstract—Fraud is a major concern for organizations world-wide. Governments and regulators are now focusing on managements responsibility for effective fraud management programs. It is not a matter whether your organization is large or small or what country or industry your organization is in, as long as humans are involved in organizations, the risk of fraud is real. This paper discusses a local case and our analyses are basically subjected to how the fraud was committed and the detection techniques involved. Beneish Model and Ratios Analysis were selected as detection tools in reference to this case. Being the best tools chosen for this case, those techniques will benefit the auditors and other professionals. They can learn these simple, yet effective methods of financial statement fraud detection. Legal implications and its uses will also be discussed in this paper.

Corporate Reporting on Minority Shareholders Information And Its Implication on Shareholders Activism in Malaysia

The objectives of the current study are of two folds; dealing firstly with the commitment of the listed companies in reporting minority shareholders’ information in their corporate annual report and secondly to determine the implication of such reporting practices towards shareholders activism in this country. It is implied in this study that if the reporting practices is fair and the level of shareholders activism is high, corporate governance practices could be significantly improved.

Configuring criminal proceeds in money laundering cases in the UK

Purpose – The purpose of this paper is to examine the way in which the courts in the UK have interpreted the meaning of criminal property in the principal money laundering offenses under the Proceeds of Crime Act 2002 (POCA). Design/methodology/approach – This paper employs a doctrinal legal analysis and secondary data, which analyze the primary source, which is POCA itself, and secondary sources including case law, articles in academic journals, books and online databases. Findings – The authors contend that the courts in the UK have been dynamically interpreting the ambit of money laundering offenses in POCA and that despite such judicial activism in the construction of criminal property, it has provided a much needed certainty to the law. Originality/value – This paper could be a useful source of information for the practitioners, academicians, policymakers and students in this particular area of crime.

Board Characteristics and Risk Management and Internal Control Disclosure Level: Evidence from Malaysia

Abstract The awareness on the risk management and internal control disclosure among the Malaysian public listed firms had increased since the global financial crisis in 2007 to 2009. In Malaysia, public listed firms must ensure accurate and timely disclosure of material information to the investors under the Companies Act 1965 and the guidelines issued by the Securities Commission and Bursa Malaysia. The current change in the public listed firms reporting is the implementation of the revised guidance known as Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers which was released on 31 December 2012. The guidelines are intended to guide directors in making disclosures concerning risk management and internal control in their firms annual report pursuant to paragraph 15.26(b) of the Bursa Malaysia Listing Requirement. This study attempts a) to develop an index to measure the level of risk management and internal control disclosures for Malaysian listed firms and b) to measure the relationship between the board characteristics and risk management and internal control disclosures level among Malaysian public listed firms. The sample of this study consists of 150 firms listed in the Main Market of Bursa Malaysia for the year 2013. The study reveals that the disclosure level reflects good compliance level among public listed firms and indicates that the board characteristics are effective in monitoring role on risk management and internal control disclosure among Malaysian public listed firms.

Determinants of Tax Evasion on Imported Vehicles

Abstract The importance of taxation as a major public finance to developed and developing countries is non-debatable. The issue of smuggling activities related to the indirect taxation had caused a great lost to the government not only in term of monetary aspect, but also non-monetary aspects such as quotas, embargo and product quality. However, the study of a tax evasion and smuggling activities in the indirect taxation have received less attention among the researchers and legislators. Hence, the current study aims to examine factors affecting the tax evasion on excise duties for importation of vehicles that can be associated with smuggling activities in Malaysia. The study has indentified several potential determinants related to tax evasion on imported vehicles, such as the tax rate, penalty structure, the cars brand and size of the business of car importers. To achieve the objectives, this study used sample data from vehicles smuggling cases investigated by the tax authorities in Malaysia. The hypotheses were tested using both univariate and multivariate statistical methods. The statistical results provided evidence on the significant values of evaded excise duties, whereby the excise duties and penalty rates are the contributing factors for the tax evasion in vehicles smuggling activities. Hence, this study contributes towards the body of literature in the discussed area and also provides strategic information to the policymakers in reviewing the tax policy related to excise duties on imported vehicles in the future.

Prediction of Business Failure and Fraudulent Financial Reporting: Evidence from Malaysia

Fraud has been of concern for many corporate managers and regulators since many businesses have been victim of business failures. Business failure corporations have reported and become an element of fraudulent financial reporting.Therefore, the first aim of this study is to examine whether a collective prediction tool can be used to predict business failure and fraudulent financial reporting.The second and more important objective of this study is to examine whether business failure companies are associated with fraudulent financial reporting. The collective prediction tool is based on ratio analysis, Beneish M-score model and Z-score model. Using publicly available information in the annual reports of 24 failed firms matched with 24 non-failed firms listed on Bursa Malaysia, relevant information are extracted and applied in the three models to assist in predicting business failure and detecting fraudulent financial reporting. A total of 10 ratios, cash conversion cycle, Beneish M-score model and Altmans Z-score model were identified for examination as potential predictors of business failure and fraudulent financial reporting. Based on the results, the model was accurate in classifying the total sample of approximately 96 per cent as predictors of business failure and approximately 83.3 per cent as predictors of fraudulent financial reporting as well as predicting the relationship between business failures and fraudulent financial reporting. Hence, it can be concluded that these model functions effectively and can be adopted by regulators, bankers, management, internal and external auditors and to the forensic accountants so that proper preventive or corrective action can be taken to mitigate fraud at its inception.

Text readability and fraud detection

Researchers and practitioners have employed various analytical and empirical examinations of financial data in their attempts to detect fraud. Nonetheless, despite the various comprehensive analytical examinations and other supporting techniques, there are still fraud incidences that are not discovered. There have been scarce research works that examine the readability of qualitative text in company annual report, particularly in detecting fraud. There could have been hidden clues in the narrative disclosures that can be indicators of fraud and thus, examining the narrative sections of a companys annual report may lead to discovery of fraud. Management obfuscation theory predicts that the management of a badly performed company tends to hide bad news by decreasing the readability of financial reports. Therefore, there is an imperative need for a reliable technique in measuring text complexity to detect the likelihood of fraud and deception in financial statements. Such fraud detection technique is also crucial to auditors and other stakeholders in their decision-making. This study suggests the application of a readability index tool as a proactive means in identifying fraud. The methodology suggests by this study is developed by using the Coh Metrix version 2 indices - Flesch Reading Ease Score Formula. To the best of our knowledge, no empirical study has employed the Coh Metrix-Flesch Reading index to examine text complexity to detect fraud of Malaysian companies.

An integrated supply chain management model for value creation: case evidence

This study examines the value creating supply chain management (SCM) practices of two selected manufacturing case firms in Malaysia. Drawing from the literature, an integrated SCM model is put forward in this paper to discuss the case findings. Our findings indicate that both case firms have engaged in an integrated SCM practice, involving logistics, information technology, supply chain integration and networking and relationship management. Consistent with the literature, the findings also indicate a marked movement from traditional SCM practices towards best value SCM practices. This paradigm shift has helped firms enhance their performance, thus sustaining value creation. In this paper, we also assert that effective communication, appropriate culture and cross-functional team formation are vital pre-requisites for firms to promote value creation within the supply chain framework.