Financial Report Review 2007

INTRODUCTION The issue started on February 2008 when the new appointed Managing Director of PCI Sdn Bhd, En Ghani reviewed 2007 Financial Report and found out there were recent increases in costs of goods sold and inventories. The rate of increase in costs of goods sold had been disproportionate with growth of sales. En Ghani was informed that one of the reasons for the increase in cost was because of the current purchasing system that contributes to redundant purchasing and high inventory holding costs.

Siti Aminah, the Chief of Financial Officer was asked to review the current purchasing system and suggested the need to implement a new computerized purchasing system that would help relieve some of its manual operations and at the same time would ensure it has the proper controls in place. En Ghani requested a formal report on current purchasing system and suggestion for a new system before the next management meeting which would be in two weeks time. En Ghani assigned Siti Aminah on the special task instead of the senior Chief Production Officer and she did not have any experience in system and technology.

The new system must be able to reduce costs, enhance control and provide easy management of users and services in qualitative and quantitative ways. CHARACTERS En Ghani : as the new appointed Managing Director of Penda Cable Industry Berhad, who reviewed past year Financial Report and asked for formal report from Siti Aminah. Siti Aminah : the Chief of Financial Officer that being asked to make formal report instead of the Senior Chief of Financial Officer.

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CURRENT PURCHASING SYSTEM IN PCI Purpose : to ensure the purchase of raw material (exclude external Aluminium cable scap) that was required for the manufacturing of cable, conductors and associated products. 1) Monthly Raw Material Summary Cik Lim General Manager of Material Resources and Planning En Razi Assistant Purchasing Manager (MRMS) Review 1st week of Forecasted Monthly Every month Material Requirement En Sam General Manager Purchasing (MMR)MRMS Planning Section En Razi 2) Cik Anne Purchasing Clerk >RM100 000 En Ghani Filing En Min Raw Material Storekeeper