CREATIVE ACCOUNTING Case: Megan Media Holdings Berhad Introduction Megan Media Holdings Berhad, an investment holding company,

provides management consultancy services. The company engages in the manufacture, sale, and marketing of data storage products, such as computer diskettes, video cassette tapes, and compact disc recordable and digital versatile disc recordable. It also manufactures, supplies, and distributes blank data storage media products, as well as distributes consumer electronic products. The company is based in Petaling Jaya, Malaysia.

The sign y In June 2006, Megan Media had announced a sterling fourth quarter for its financial year ended April 2006. However in April 2007, the company announced that two major subsidiaries had defaulted on maturing trade facilities. y Megan Media appointed Ferrier Hodgson MH Sdn. Bhd. as investigative accountant for wholly-owned subsidiary Memory Tech Sdn. Bhd. y A preliminary report by Ferrier Hodgson highlights substantial irregularities in the Memory Techs financial statements, fictitious trade creditors and debtors, undisclosed related party transactions, and a bogus deposit payment of RM211million for 13 production lines. y Ferrier Hodgson MH Sdn. Bhd. also revealed that the company's assets could potentially fall short by RM456 million. y Fraud had significant impact on Megan Medias share price.

Questions

1. Is investors are less confident in the integrity of the Malaysian capital market after the case's Megan media? 2. Is fraud made a significant impact on the market price of the company after the news of the false statements become known to the public? 3. What a main cause accounting fraud still happened in Malaysia? 4. Is poor implementation of laws and rules in Malaysia cause corporate crimes of Megan Media? 5. What are the lessons from the case of the Megan Media to all company in Malaysia? 6. What are the ethical issues raised by this case? 7. It is true Malaysian economic system dominated by political decisions until fail to achieve its primary objective which is safeguard the public interest? 8. Should outside auditors to be rotated to avoid from conspiracy? 9. What should an auditor do if he or she believes that the ethical culture of a client is unsatisfactory? 10. What should Megan Media do to prevent this case occur again to its subsidiaries? 11. What should the internal auditors have done that might have assisted the directors?