Kecubung Berhad is a company whose shares are listed on the Bursa Malaysia. The company is in the business of managing large scale construction projects.

The audit committee has been reviewing the initial draft accounts for the previous financial year and two of the committee members have raised concerns about whether the treatment of income is in line with accounting standards. The chair of the audit committee, Ganesh Kumar, has passed this concern on to Sophia Tan, the finance director, but she said that she is happy with the treatment, and that the auditors have not flagged it as a concern, so there is nothing for the committee to be worried about. Sophia told Ganesh does not think that the concern needs to be raised with the Board at the next Board meeting when the accounts are to be discussed.

The four largest institutional shareholders in Kecubung, who together own 7% of the share capital, but with each owning less than 3%, are unhappy about the performance of the Chief Executive of Kecubung and think that the company needs a change of strategy. One of the investors, Permodalan Bersama has made a public statement criticising the Chief Executive. The Chief Executive is frustrated by the criticism because Kecubung is currently negotiating the acquisition of another company, which will result in a diversification of the business to cover domestic housing projects and which he hopes to sign in a few weeks' time and then announce to the market. The Chief Executive is considering asking the four investors to meet with him this week so he can tell them about the diversification and so reduce their criticism.

REQUIRED:

(a) Taking into account the principles of the Malaysian Code of Corporate Governance 2021 and provisions of Bursa Malaysia Listing Requirements (BMLR), analyse the steps that the audit committee should take in light of the concern raised by the committee members about the treatment of income in the draft accounts, including what disclosures should be made in the audit committee report in the annual report, and explain what the responsibility of the Board as a whole is in relation to the approving the annual accounts. (13 marks)

(b) Discuss the steps that the four investors in Kecubung could take, in light of their concerns about the Chief Executive and whether the Chief Executive should meet with the investors this week to tell them about the proposed acquisition. (12 marks)