Listed firms' failure to release audited reports on time is unacceptable

PETALING JAYA: Industry experts say the failure of listed companies
to release their audited reports on time is unacceptable, for whatever
the reasons.
In recent days, three companies have announced to
the stock exchange that they would be delaying the release of their
annual audited reports. The companies concerned were information and
communication technology solutions provider Patimas Computers Bhd, garment manufacturer Hytex Integrated Bhd and network solutions provider Key West Global Telecommunications Bhd.
Deloitte Malaysia country managing partner Tan Theng Hooi told StarBiz in
an e-mail reply that the “failure to release financials on time is not
acceptable and may indicate there could be unresolved accounting,
management or other issues in hand”.
“A public-listed company
must invest in the relevant infrastructure such as appropriate
accounting and/or information technology system and also ensure there
are adequate and competent resources to ensure timely financial
reporting is done at all times,” he added.
Of the three, Patimas
seems to have the most serious problem. The company, which requested
for a suspension of trading from Tuesday, only resumed trading
yesterday.
Its board of directors said in a filing with the
stock exchange that the delay was due to unresolved significant
accounting and audit findings/queries of the company which were
recently brought to the attention of the audit committee and the board
of directors by the external auditors.
The auditors said they
were unable to obtain sufficient competent audit evidence to form an
opinion for the purpose of issuance of the report as they were unable
to verify the veracity of sale and purchase transactions undertaken by
the company with a group of customers/suppliers and satisfy themselves
as to the recoverability of the amount owed of about RM21mil by these
customers as included in trade receivables.
The board has taken action by removing the financial functions and authority of the company's executive directors, appointed PKF Advisory Sdn Bhd to conduct a special audit besides authorising the audit committee to oversee the day-to-day affairs of the company.
The
directors said at this stage they were unable to ascertain the extent
of the financial and operational impact of the significant audit
findings with the report to be issued on or before Aug 30 once further
information had been obtained on the audit findings.
They expect the special audit to be completed within two months from July 30.
Meanwhile,
Hytex, which saw a one-hour halt in the trading of its shares
yesterday, was unable to meet an Aug 1 deadline for the release of the
audited report, whose deadline was on or before July 31.
The
company said the board was targeting to release the report today
because the report finalised by the auditors on Tuesday evening
differed from the draft that was approved by the directors on July 24.
“In
view thereof, the board requires more time to deliberate and discuss
with the auditors before submission of the annual financial statements
for 2012,” it said.
For Key West, which had obtained approval
from the Companies Commission of Malaysia for an extension of time to
present the report on or before Aug 7, the reason for the delay was the
lack of resources.
The Practice Note 17 company said more time
and resources hade been channeled to formulate a regularisation plan
due to its affected listing status.
KPMG Malaysia head of audit
Johan Idris said planning upfront and involving more senior management
was one way to avoid such a delay although there was no single best
practice.
“Accounting can no longer be relegated to a backroom
function and must involve the chief executive officer and chief
operating officer. Clients may also consider investing in the proper
financial tools and look to up-scaling their human capital and
increasing their headcount.
“Accounting standards are getting
more complex and carry the force of law; hence, non-compliance means
you break the law. Upfront engagement with auditors when transactions
arise would certainly help, but more is to be done,” he noted.