KUALA LUMPUR (June 25): Serba Dinamik Holdings Bhd, whose share price dropped to a fresh record low of 46.5 sen this morning, issued a statement late last night to reiterate again its stance that its former external auditor KPMG PLT had in fact committed a breach of contract, and that the latter should have communicated its professional scepticism to the client instead of prematurely reporting it to the regulators.
In a response to media releases issued by the Securities Commission Malaysia (SC) and Bursa Malaysia, the oil and gas (O&G) firm also restated its stand that KPMG had raised red flags on the group's auditing issues in an inappropriate manner.
Serba Dinamik was referring to KPMG's decision to go to the SC last month with its audit red flags in the company’s books for the 12-month period ended Dec 31, 2020.
Following that, the SC announced in the first week of June that it had started investigations into the matter in regard to the dispute between Serba Dinamik and KPMG over the handling of the audit issues, and that it had secured documents and records from Serba Dinamik to assist its investigations.
"We thank profusely both institutions (the SC and Bursa) for alerting us of the laws in relation to auditors’ obligations in reporting to the SC.
“We, however, wish to point out that auditors in performing that duty have the highest onus to exercise that professional opinion, that there has in fact been a breach or non-performance of the identified laws, not a mere reasonable belief on their part that that was so.
"We also accept the advice by the two esteemed institutions, with gratitude, that auditors can exercise some elements of professional scepticism during their audit, but this mere scepticism must be communicated to their clients for resolution of the matters, and mere scepticism is not sufficient for auditors to prematurely report to the detriment of the companies and the market," Serba Dinamik said in a press statement yesterday.
The statement was released after the announcement that KPMG had quit as Serba Dinamik’s external auditor, citing the reason as it could not discharge its duty independently.
In the statement, Serba Dinamik also highlighted that it had never claimed that its newly appointed chairman Datuk Mohamed Ilyas Pakeer Mohamed had “officially communicated with either institutions”, namely Bursa and the SC.
"We thank the institutions for not delving into the facts of this case, whose facts are still at large," it added.
To recap, Mohamed Ilyas during a press conference on Tuesday claimed that he had previously spoken to the SC and Bursa about KPMG's alleged breach of contract and non-performance.
Both the SC and Bursa later denied such a meeting with Mohamed Ilyas.
The commission pointed out that auditors should be allowed to carry out their responsibilities and render their independent opinion without fear or favour, and discharge their duty free from any retaliation, after Serba Dimanik filed a lawsuit against KPMG.
The audit issues, which were revealed to the public late last month, have wiped off more than RM4 billion market capitalisation from Serba Dinamik. Its share price has plunged from RM1.61 prior to the news to below 50 sen currently.
KPMG highlighted discrepancies involving transactions to the tune of RM4.54 billion to the company's independent directors last month.
Institutional shareholders, such as the Employees Provident Fund (EPF) and Kumpulan Wang Persaraan (Diperbadankan) (KWAP), have cut their stakes in the company.
At the time of writing today, shares in Serba Dinamik were six sen or 11.2% lower at 47.5 sen with a market capitalisation of RM1.77 billion.
https://www.theedgemarkets.com/article/auditors-should-communicate-professional-scepticism-client-premature-reporting-regulators-%E2%80%94
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If a person can openly tell lie, what do you think of this man’s integrity?
To recap, Mohamed Ilyas during a press conference on Tuesday claimed that he had previously spoken to the SC and Bursa about KPMG's alleged breach of contract and non-performance.
Both the SC and Bursa later denied such a meeting with Mohamed Ilyas.
2021-06-25 15:41
Stock Kingdom
Who is dare to take up the special review job? It may be used as court evidence by the management against KPMG & become the subjects at court.
It has converted the job objective from independent review to court investigating findings.
Serba should engage special private investigator, not auditors.
2021-06-25 15:36