KUALA LUMPUR, Malaysia (July 2): Ernst & Young Consulting Sdn Bhd (formerly known as Ernst & Young Advisory Services Sdn Bhd) [EY] has been formally appointed by Serba Dinamik Holdings Bhd as the special independent reviewer to assist the board in conducting the special independent review on the issues raised by its former external auditor KPMG PLT. Serba Dinamik stated the selection of EY is “also done subject to the directive from Bursa Malaysia pursuant to paragraphs 2.23 and 2.24 of the Main Market Listing Requirements of Bursa Malaysia,” according to a filing with Bursa Malaysia.
“This decision is based on discussions between the company and Bursa Malaysia, which concluded that EY is suitable for the engagement as a recognized ‘Big 4′ firm of auditors,” the statement continued.
The following is the scope of the special review:
(a) Assess the legitimacy and veracity of the transactions and balances on sales transactions, trade receivables, and materials on sites with respect to the 11 identified clients; (b) Quantify the likely financial impact, if any.
To determine the validity and sincerity of six indicated local vendors’ purchases.
(a) To evaluate the validity and veracity of the IT contracts/transactions entered into with the six identified customers and two identified suppliers; (b) To evaluate the appropriateness of the revenue and costs recognized in the financial year in relation to the above-mentioned customers and suppliers.
To determine the existence (where possible) and legitimacy of one specified customer’s and one identified supplier’s transactions and balances in Bahrain.
Serba Dinamik met the deadline set by Bursa today to appoint an independent reviewer to address the concerns made by KPMG about its financial accounts for the period ending June 30, 2021.
To summarize, Bursa ordered the oil and gas engineering firm to recruit an independent reviewer by today in order to guarantee that the audit issues raised by KPMG are rectified “timeously and provide market clarity.”
Serba Dinamik, whose five independent directors resigned last Friday, was also told by Bursa that the scope of the special independent review must be the same as that agreed upon by the audit committee and EY on June 15 and presented to Bursa, or as instructed by Bursa.
Furthermore, Bursa required that the accounting firm hired to conduct the special independent study be allowed to report directly to it and the Securities Commission Malaysia on the review’s progress and results after it is completed.
On May 25, the audit dispute between Serba Dinamik and KPMG was made public when the firm declared that it intended to start an independent assessment of the audit issues raised by the auditor during its statutory audit.
After Serba Dinamik’s board decided to take legal action against the former for suspected carelessness, KPMG resigned last week on the grounds that it was unable to execute its role as an auditor independently.
“Trade receivables balances and sales transactions for information technology contracts” were among the issues noted by KPMG, with a total value of nearly RM4 billion at stake.
Serba Dinamik’s stock price fell to a new low of 32 sen on Tuesday as a result of the audit difficulties. In just four weeks, the market capitalisation (market cap) of RM4.7 billion has vanished. The stock recovered marginally today, closing the week at 38.5 sen. A total of 542.68 million shares changed hands for a total of RM209.59 million in turnover.
Datuk Dr Mohd Abdul Karim Abdullah, the company’s largest stakeholder, was obliged to sell his shares this week due to the dramatic reduction in share price.
According to stock exchange documents, Abdul Karim, who is also the company’s managing director and CEO, has sold 203 million shares this week. His holdings have reduced to 21.59 percent, down from 27 percent before the forced sale of shares./n
