For those who have not been keeping touch with the corporate world what with a pandemic raging and daily cases in Malaysia have yet to abate we don’t blame you, peculiarly there has been another case contained in a boardroom which has been raging between a private listed entity and its external auditors.
Serba Dinamik with valuation above the billion mark is taking legal action on KMPG, its auditor over discrepancies and comments the auditor made over the PLC’s yet to complete audit report. The saga has seen many twist and turns, including official statements from Security Commission and Bursa Malaysia, now we have Malaysian Institute of Corporate Governance weighing on the matter.
Deputy President, David W Berry issues a media release on the ongoing development, as the matter is extremely sensitive, we publish the comments as it is.
To the development between Serba Dinamik and KPMG PLT – what does KPMG’s resignation indicate?
KPMG’s resignation as Serba Dinamik’s external auditor isn’t surprising in view of Serba Dinamik’s decision to commence legal proceedings against KPMG. It is clear the relationship which should exist between client and auditor has broken down. KPMG cannot complete its audit work to an acceptable professional standard in this climate, nor
can Serba Dinamik entertain a continued relationship.
How do you see this development transpiring moving forward?
Serba Dinamik initially announced it would appoint BDO to conduct an independent review of the audit matters raised by KPMG. Subsequently, Serba Dinamik named EY and said it was agreeing terms. Most recently, Serba Dinamik has said it was reviewing the need to appoint EY. Whatever choice is made, a reputable audit firm with established international affiliations will be needed to complete the statutory audit for the 2020 financial year. In this process, the audit matters raised by KPMG will have to be addressed.
Is it wise for Serba Dinamik to take legal action against its external auditor for the alleged negligence?
As Serba Dinamik has formally commenced legal proceedings against KPMG, which has said it will vigorously defend, we cannot comment on the facts or the virtues of the case. However, it is most unusual for a PLC to take such action against its external auditor, particularly before the audit is complete and the company’s earlier proposed independent
review has commenced, and is to be regarded as a regrettable decision – a view we believe will be shared by the regulators.
It is to be hoped a way forward is agreed soon and the outcome embellishes Malaysia’s reputation as a financial market which exemplifies best practices in corporate governance.
