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7. Kotakkatik Berhad makes lunch boxes. This company has factories in Kepong Baru, Tampin, Wangsa Maju and Ulu Selangor. The auditors, KMPG have completed the interim audit for the year ended 31 December 2019 in November 2019 and prepared their report to management." Your staff observed the following: Each factory has a separate bank account at their local Bank Raykat. At times the individual accounts are overdrawn but the bank has agreed to set-off for interest calculations. Sometimes, the auditor noted that the bank account has a net credit balance The manager of the Nibong Tebal factory uses the policy of straight line depreciation for its plant when preparing the factory accounts. However the managers of the three other factories do not keep a plant register. The factory at Ulu Selangor purchases large quantities of scrap plastic from scrap merchants and paying in cash. The plant manager will approve the purchase in writing but there is no regular check of the cash balance kept to make these purchases. The stock of finished goods at Wangsa Maju is valued at total absorption cost using budgeted direct wages for overhead purposes. The other factories practice overhead absorption using machine hours. All the manual workers are considered as casual workers and are paid in cash. Their wage packets are simply given to the foreman to hand out. The workers need not sign any documents when receiving the cash. The factories each use a computerised sales ledger system with sophisticated analytical facilities. The sales team at the Kepong Baru plant does not analyse their sales on a month to month and year by year basis like the other three locations. You will be holding a meeting with your partners to discuss issues to be brought out in the management letter. Required Describe, from the information above, the issues to be highlighted to your partners in the management letter. [30 marks)

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