ZA Berhad is an investment holding company located in Malaysia. Property development, building, property investment, and management
Question:
ZA Berhad is an investment holding company located in Malaysia. Property development, building, property investment, and management services are the primary activities of the corporation and its subsidiaries. The firm was formed by the merger of four successful companies, namely OK Sdn Bhd, BZ Sdn Bhd, and TD Sdn Bhd, as well as a property developer, XTRA Sdn Bhd. The company has a great financial performance and an excellent corporate reputation. The construction division, which contributes significantly to sales and operating income, specializes in infrastructure, residential and commercial buildings, and purpose-built structures around the world. ZA Berhad is a Malaysian company with activities in Thailand, the Philippines, Vietnam, Laos, Bangladesh, and China. The Chief Operating Decision Maker (CODM) or Chief Executive Officer (CEO) of ZA Berhad will assess the operating results and make a decision on the resources that can be given to the segments. The following are the operating segments' details, broken down by geographical area, product, and service:
ZA Berhad Operating Segment by Geographical Area (RM 000,000)
Malaysia | Thailand | Philippines | Vietnam | Laos | Bangladesh | China | |
Revenue | 600 | 150 | 400 | 200 | 400 | 350 | 700 |
Profit/(Loss) | 100 | -60 | 80 | -40 | 20 | 50 | 250 |
Assets | 1,250 | 300 | 700 | 500 | 750 | 900 | 1,600 |
ZA Berhad Operating Segment by Product and Services (RM’ 000,000)
Property Development | Construction | Property investment | Provision of management services | |
Revenue | 800 | 1,150 | 550 | 300 |
Profit/(Loss) | 150 | 250 | -100 | 100 |
Assets | 1,788 | 2,850 | 872 | 490 |
The CEO and senior management team must critically analyze, evaluate, and make a suitable decision with REASONS and JUSTIFICATIONS whether to report the operating segments by product and services or by geographic area according to MFRS 8 Operating Segments.
REQUIRED:
Assume you are the CEO of the company, and write a brief report to the board of directors of ZA Berhad with the following information:
- Decision with REASONS and JUSTIFCATIONS whether to report the operating segments by product and services or by geographical area.
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg