Subject: Public Sector Accounting in Malaysia

Question 1 Read the case below and answer the question that follows: Three years ago the government entered into a contract with Bricksteel Berhad to build a community complex at a selected rural area. The idea was to develop an integrated complex that will accommodate classes for the local community, a sports arena, a recreation area, laboratories, a library, a mini theatre, a cafeteria, a common hall, a business centre, consultation and counselling rooms, and ofces. Various programmes were planned to be carried out at the complex, including career and technical classes, seminars and discussion forums. The project is part of a master plan to expand community centres within the country. The project was supposed to be completed within two years. At the start of the project, additional plots of lands were acquired because the reserved land was too small for the project. The construction of the complex also faced resistance from squatters. The squatters claimed that they have occupied the land for more than 25 years and have developed sustainable livelihood. Relocation would cause them to lose their current way of life and increase their cost of living. After several meetings that took place over two months, the squatters consented to be relocated. The government agreed to pay each family RM2,5 00 in an ex gratia package and RM300 in monthly compensation. Thirty-eight families were then relocated to an apartment complex. However, the project suffered problems which caused numerous delays and cost overran by RMSA million, resulting in the termination of the contract with Bricksteel Berhad. Another company, Gamooda Berhad. was then appointed to take over the project. Bricksteel Berhad claimed to have completed 80% of the work and delays were due to late approval of design, delays in the handover of the land and disputes over a variation order. Bricksteel Berhad threatened to sue the government for the damages incurred by the company. Ten months ago, the state government issued a stop- work order on the project. The state government claimed that the project was an environmental hazard. The clearing of the land to building the complex caused landslides in the nearby villages. The construction was delayed for another month to installation of retaining walls. Required: A development project such as the rural community complex requires much planning. Critically discuss FIVE (5) factors that the government should consider when deciding to engage in this project. Total: 30 marks