A number of firms have accounts qualified

  • Business
  • Wednesday, 04 May 2011

PETALING JAYA: Auditors qualified the accounts of a large number of companies due to the stricter requirements of the Audit Oversight Board (AOB).

The AOB, which was established under Part IIIA of the Securities Commission Act 1993, commenced operations on April 1 last year. It requires firms that audit the books of public listed companies to comply with international accounting best practice standards.

A company's accounts are qualified by its auditors when they doubt that the picture of the company's activities presented is true, complete and fair.

Among the companies that had their accounts qualified was Leader Steel Holdings Bhd.

In auditing Leader Steel's financial statements as at Dec 31, 2010, KPMG Malaysia said it could not obtain enough evidence from the company concerning the recoverability of deposits paid to suppliers, amounting to RM2.76mil, in the absence of purchases from the suppliers for the past one year.

Also, Leader Steel did not provide for outstanding taxes and penalties from the Inland Revenue Board, amounting to RM4.8mil, in its financial statements as the company believed it could succeed in its appeal concerning the claims.

KPMG also qualified the accounts of Lebar Daun Bhd, as it was unable to confirm trade payables amounting to RM22mil that had remained unpaid since 2008.

The auditing firm said except for the potential adjustments, the financial statements had been properly drawn up in accordance with financial reporting standards and the Companies Act 1965 as of Dec 31, 2010.

KPMG Malaysia said in a report that it was unable to confirm the existence and accuracy of most of the balances via direct confirmation, telephone contacts or other means as these creditors were no longer operating in their last known addresses and telephone numbers.

“Hence we've not been able to obtain appropriate audit evidence to establish the existence and accurary of these liabilities,” it added.

Meanwhile, accounting and consulting firm Adam & Co said it was unable to obtain the audited financial statements of all the subsidiaries of Vastalux Energy Bhd, a PN17 company.

Adam & Co also pointed out that the winding up petition of the company's major subsidiary Vastalux Sdn Bhd, and a legal proceeding by an unsecured creditor, had raised doubts about the ability of the group to continue as a going concern.

Adam & Co also qualified the accounts of ARK Resources Bhd as it said the the audited financial statements of a subsidiary,

Ark Thai Co Ltd, were not made available.

Nam Fatt Corp Bhd, a PN17 company which was audited by Deloitte & Touche, had not finalised its plan to regularise its financial position as at April 29 this year.

The auditor said it was not satisfied about the completeness of recorded liabilities as the statements of Nam Fatt and some of its subsidiaries had not been prepared for the financial year ended Dec 31, 2010.

Ernst & Young qualified the accounts of Metronic Global Bhd due to insufficient evidence about the timing of collection of debts amounting to RM20.3mil.

Ho Hup Construction Company Bhd, a PN17 company, also had its accounts qualified by audit firm UHY, due to the lack of audited financial statements of some subsidiary companies for the year ended Dec 31, 2010.

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