The Tumpat Area Fishermen's Association has carried quite heavy debts and credits for many years. The breakdown into various project accounts of debtors and creditors is indicated in Appendix XII.
These receivables and payables include those listed not only under items of receivables and payables in the financial statements but also under items of an advance and deposit which actually represent credits and debts. It must be noted here that the figures presented in these two tables were given to the Expert from PN accounting staff based partly on assumption because there could be found no evidence for some accounts carried forward for many years, and some of these accounts may have already been settled. These tables may, however, be useful in understanding the financial situation of the PN.
LKIM had one time several projects, such as the trawl fleet project and the fish marketing project which delivered fish to the PN as well as purchased fuel and ice from the PN. LKIM also operated the central purchasing unit which supplied fuel, gears, nets and other commodities for the input supply and retail shop projects of PNs. These LKIM projects had already ceased their operations many years ago, and the accounts due both in receivables and payables to and from PNs have been left outstanding.
Furthermore, the Tumpat PN once had retail shop operations in the Geting Complex and Dalam Rhu which closed down some years back. All accounts carried forward from the Dalam Rhu retail shop were transferred to the Tumpat retail shop accounts. Those accounts carried forward from the Geting retail shop had, however, been written off from the accounting books except for cash and inventory accounts which were transferred to the Tumpat retail shop accounts. The accounts of receivables and payables from the Geting retail shop had been removed from the current accounts of the PN. The Expert, however, has gathered the figures of receivables and payables and included them in the total credits and debts.
Figures listed under “LKIM”, “Projects within PN”, and “Doubtful or Bad Accounts” should be regarded as frozen accounts, which suggests that almost three quarters of total receivables and more than 90% of payables have already been frozen for many years.
Most of the receivables listed in the table were classified as an “accounts receivable on trade”, “various accounts receivable” and “miscellaneous receivables” in the current assets of the PN financial statements. These accounts receivable should only be classified as current accounts when they represent amounts due for sales in the normal course of everyday operations, and any proportion of accounts receivable overdue for a certain period of time should be separated from current accounts to give a clearer view of the finances. This practice should also be applied to payables.
Furthermore, a member of the management of a well-organized business concern may often obtain an “aging” of the receivables, that is, a breakdown showing the amount due on any particular date, e.g. the end of a month, the amount up to 30 days past due, 31 to 60, 61 to 90, 91 to 180, and over 180 days past due on original terms of sale.
The management staff of the PN has, however, never taken any measure to keep the accounts receivable and payable in healthy shape, which caused the PN to any excessively heavy credits and debts.
The structure of receivables and payables always indicates the managerial efficiency in the conduct of the business. Certainly, management in efficiency over a period of time will affect the ability not only to collect past due credits but to pay even current debts.
Also the receivables due from LKIM, and the payables due to LKIM should have been set-off at intervals of particular periods to alleviate credits and debts, but such adjustment has not been initiated either by LKIM or PN.
Though each project of the PN carries separate financial accounts, it seems odd that the accounts receivable and payable which were accrued from sales made or loans extended between different projects, are carried forward unsettled for many years as these projects constitute a veriety of economic operations of the same organization, the Fishermen's Association. These accounts should also be set-off or written-off so that the management staff can concentrate their efforts on the credit management of actual business accounts.
