Established in 1984 and headquartered in Malaysia, FDCR Berhad is the worlds largest manufacturer of healthcare products. The product lines are face mask, pharmaceutical products (drugs and medicines), dental care products and gloves. Basically, FDCR Berhad with 7 subsidiary and 4 associate companies from local and foreign operations, supply all types of high quality medical devices to all major hospitals, clinics, pharmacies, healthcare shops and others globally.

You are the Chief Executive Officer (CEO) of FDCR Berhad the leading healthcare product manufacturing group of companies with annual external revenue approximately of RM2,800,000,000, profit of RM400,000,000 and total assets of RM6,000,000,000 committed to sustainable practices in the 3 key focus areas: economic, environment, & social. FDCR Berhad has manufacturing operations in Malaysia, Thailand, Philippines, Vietnam, Laos, Bangladesh and China. It also has marketing offices in these countries as well as USA, Germany, India, Arab Saudi, Dubai, Sweden, Switzerland, Australia, New Zealand, Argentina and Brazil and exports to over 3,500 customers in 195 countries worldwide.

Scenario:

The related party transactions arose within the Group to ensure that the transactions were fair, reasonable and on normal commercial terms as well as not detrimental to the minority shareholders and were in the best interests of the Company. In year 2020 there is unsecured loan transaction amounting to RM65,000,000 given by FDCR Berhad to one of the foreign subsidiary without a proper approval of the board of directors. The purpose of the loan was to provide urgent financial assistance to its foreign subsidiary due to Covid-19 global outbreak. You as the CEO of FDCR Berhad decided not to disclose the unsecured loan to foreign subsidiary in the notes to financial statements. Anyway, one of the senior management recommends the CEO to seek audit opinion from the company auditors.

SECTION B MFRS 124 Related Party Disclosures

As the company auditor write a report not more than 2 pages the impact and ethical issues for not disclosing the unsecure loan to foreign subsidiary in the financial statement in accordance with MFRS 124 Related Party Disclosures. The company auditors advice and recommendation is critical for the reputation of FDCR Berhad the world class healthcare products manufacturer.