FACULTY OF BUSINESS & MANAGEMENT

BBAA4203

AUDIT 2

SUNIL A/L SOMASEKHARAN

831121045027001

6906020859550

0127751121

Learning Centre: MELAKA

SEMESTER : SEPTEMBER 2014

Introduction

Company 1 Maybank

Maybank is the largest bank in Malaysia and 4 th largest in South East Asia. They offer products
ranging from corporate and consumer banking, investment banking, insurance and takaful, asset
management, Islamic banking, offshore banking, venture capital financing and stock broking.

They have over 2200 offices in 20 countries, serving over 22 million customers and employing
47,000 staff around those locations. They are also the largest listed company in Bursa Malaysia
with a market capitalization of RM 88.1 billion. They have assets of RM 560 billion, generating
profits after tax and minority interests of RM 6.55 billion for FY 13.

Their Vision is to be a regional financial services leader and their mission is to humanize
financial services across Asia.

Company 2 Ambank Berhad.

Ambank is the 5th largest bank in Malaysia and offers products and these are divided into several
business units namely :
1)
2)
3)
4)
5)
6)
7)

Retail Banking
Business Banking
Corporate and Institutional Banking
Investment Banking
Markets
General Insurance
Life Insurance and Family Takaful

They offer products ranging from Conventional and Islamic Banking loans and deposits to
Insurance and Investment banking. It posted Profit After Tax of RM 1,782.4 million with the
asset size of RM 132,353.2 million. It employs 12,270 employees.

Vision : As Malaysias preferred, diversified, internationally connected financial

solutions group,We take pride in growing your financial future with us.

Objective of FRS 110

The standard covers the below :

The timing of when an entity should make adjustments to its financial statements for events that
occur after the reporting period.
The required disclosures that the entity is required to make of the date of which the financial
statements were authorized for issue and also the events that occurred after the reporting period
This standard also states that the entity should not prepare its financial statements that may give
an assumption that the entity is a going concern basis if events after the period otherwise is
showing that the entity is not a going concern.
This standard will apply for the disclosures and the accounting for the events after the reporting
period.
This standards covers events, either favourable or unfavourable which occurs between the end of
the reporting period and the date of when the financial statements are authorized for issue.

There are 2 types that can be identified which are covered in this standard :
a) There are evidence of conditions existed at the end of the reporting period (adjusting
events after the reporting period)
b) Those of which are indicative of conditions that arose after the reporting period (nonadjusting events after the reporting period).

The process of authorizing the financial statements may vary according to the management
structure, statutory requirements and procedures that are followed in the preparation and the
finalization of the financial statements.
In situations where the entity is required to submit the financial statements for the approval of the
entitys shareholders after the date of issue, in this case it should be taken as the first date of issue
and not the date when the shareholders provided authorization of the financial statements.
Example :
The management of company ABC completed the draft financial statements for the period
ending 31 Dec 2013 on 25 Feb 2014. The Board of Directors reviewed and authorized the
financial statements for issue on 31 March 2014. The company announced its profit and other
necessary financial information on 01 April 2014. The financial statements were made available
to shareholders on 15 April 2014. The shareholders approved the financial statements during the
companys AGM which was held on 31 May 2014.
In this situation the financial statements were authorized for issue on 31 March 2014( the day of
which the Board of Directors approved the financial statements for issue) and not on 31 May
2014 (shareholders approval during the AGM).
There are instances whereby the management is required to submit the financial statements to a
supervisory board(which comprises of non-executives). In this case, the financial statements are
authorized for issue when the management authorizes them for review of the supervisory board.
Events after the reporting period includes all events that occur up to the date when the financial
statements were authorized for issue, even though those events occur after the profit or other
financial information have been made public.

Analysis of types of events that occurred under FRS 110 for the companies chosen.
Company 1 Maybank Berhad.
Maybank Berhads financial statements for the period ending 31 Dec 2013 was authorized for
issue by the Board of Directors for issue on 27 Feb 2014.

Events that occurred between the end of the reporting period and the authorization of the said
financial statements by the board of directors were.

1) Maybank had issued RM 1.6 billion Basel 3 compliant Tier 2 Subordinated notes with a
tenure of 10 years on a 10 non-callable 5 basis under the revised Subordinated Notes
program on 29 January 2014. These notes will be due in 2024. The purpose of this
issuance will be to fund Maybanks working capital, general banking and other corporate
purposes.
2) Maybank had also issued JPY 30.0 billion Senior Fixed Rate Notes with a tenure of 5
years under the USD 5 billion Multicurrency Medium Term Note Programme on 06 Feb
2014. These notes will be due in 2019. The proceeds from this issuance will be used for
Maybanks working capital, general banking and other corporate purposes.
3) A final single tier dividend of 4 cents per share cash and an electable portion of 27 cents per
share(under the Dividend Re-investment Scheme) for the financial year ending 31 December
2014 will be paid to the shareholders at a date to be determined by the directors. The dividend is
not reflected in the financial statements of the current year, however, if it is approved by the
shareholders, it will be accounted for in equity as an appropriation of the retained earnings of the
company for the financial year ending 31 December 2014

Company 2 Ambank Berhad.

Ambank Berhads financial statements for the period ending 31 March 2014 was
authorized for issue on 19 May 2014.

There is only two events that occurred between the end of the reporting period and
the authorization of the financial statements by the board of directors :
1) On 1 April 2014, the Company announced that its wholly owned subsidiary,
AMAB Holdings Sdn Bhd (AMAB)and Metlife, a whoilly owned subsidiary of
Metlife Inc. have received the approval of the Minister of Finance and Bank
Negara Malaysia for the proposed strategic partnership between AMAB Sdn
Berhad and Metlife. As such the company entered into a conditional share
sale agreement with Metlife for the sale of equity interests held by AMAB in
AmLife and AmTakaful at an aggregate cash consideration of RM 812 million.
2) A final single tier dividend of 16.9 % for the financial year ending 31 March
2014 will be paid to the shareholders at a date to be determined by the
directors. The dividend is not reflected in the financial statements of the
current year, however, if it is approved by the shareholders, it will be
accounted for in equity as an appropriation of the retained earnings of the
company for the financial year ending 31 March 2015

Differences between the two companies

Both Maybank and Ambank reported subsequent events adequately in their annual
reports, however the events were different between the 2 companies. Maybank
issued bonds to finance their working capital needs, however Ambank sold half of
their insurance business to another company as part of their strategic direction for
their insurance business to bring in expertise from another insurance company.

References

1) Maybank Annual Report 2013

Link : http://www.maybank.com/iwovresources/corporate/document/my/en/pdf/annual-report/2014/Maybank_AR2013Financial_Statements.pdf

2) Ambank Annual Report 2014

Link :
http://www.ambankgroup.com/eng/InvestorRelations/AnnualReports/Documen
ts/2014/AMMB-Annual-Report-2014.pdf
3) MASB Website on FRS 110
Link : http://www.masb.org.my/images/stories/FRSIC/FRS110_may2010.pdf