Three companies’ financial statements qualified by auditors

PETALING JAYA: Financial statements of three companies – Pasdec Holdings Bhd, Central Industrial Corp Bhd and China Ouhua Winery Holdings Ltd have been qualified by their external auditors.
In a filing with the stock exchange, Pasdec’s independent auditors Messrs Hanafiah Raslan & Mohamad expressed qualified opinion over the impact from the unauthorised mining activity was carried out on land belonging to a subsidiary, Pasdec Corporation Sdn Bhd.
“Management is still in the process of determining the legal and financial implications of the matter, if any, to the subsidiary and the group. Consequently, we are unable to determine whether any adjustment arising from this matter is necessary,” it said.
Meanwhile, Central Industrial external auditors, Messrs KPMG issued its qualified opinion after the company discovered inventories balances that has been overstated.
Central Industrial could not determine how the overstatement happened which could be due to operational and internal control weaknesses, functional limitations of the company’s current Enterprise Resource Planning system and possible fraud.
“Based on a physical inventory count conducted in July 2015, management had identified a cumulative overstatement of the group and company inventories balances amounting to RM10.77 million.
“Management was unable to determine the portion of the overstatement that could have occurred in prior years which have an impact on cost of sales figures in prior financial years’ financial statements,” it said.
Accordingly, Central Industrial have accounted for the RM10.77 million variance as inventories written off in the current financial year ended Dec 31, 2015.
For China Ouhua Winery, its external auditors Messrs Helmi Talib & Co said the qualified opinion is related to the company’s acquisition of land, buildings and ancillary facilities for RMB132 million (RM79.8 million) back in 2012.
Given that no independent professional valuation was done on the asset buy, it was unable to ascertain whether the net recoverable amount of the assets acquired will exceed the total purchase consideration.
The auditors were also unable to obtain sufficient appropriate audit evidence to satisfy itself of the extent of recoverability of the RMB118.8 million deposits in the event that the transaction is not completed.