Scanwolf reprimanded by Bursa Malaysia over 384% deviation in net losses

KUALA LUMPUR: Bursa Malaysia Securities Bhd has reprimanded Scanwolf Corp Bhd on the grounds of breaching paragraph 9.16(1)(a) of the Main Market Listing Requirements (Main LR) as it failed to take into account the 384% deviation between its audited and unaudited accounts in its fourth quarter (Q416) results ended June 30,2016.
The stock exchange regulator said in a statement that Scanwolf had failed to ensure that it took into account the adjustments made in relation to its financial results in Q416 as stated in its announcement dated October 19, 2016, which revealed that there was a difference of RM1.63 million or 384% between the net loss recorded in its audited (RM2.05 million) and unaudited accounts (RM424,605).
The adjustment was mainly due to the consolidation adjustment for elimination of unrealised revenue and property development costs between two subsidiaries of the company.
"There was no reasonable justification for the company’s failure to take into account the adjustment that was made in accordance with clear accounting standard under MFRS 10 which requires consolidated financial statements to eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group," Bursa Malaysia noted.
As a result, the company will have to review and ensure the adequacy and effectiveness of its financial reporting function and carry out a limited review on its quarterly report submissions, which has to be performed by the company's external auditors for four quarterly reports commencing no later from the quarterly report for the financial period ended December 31, 2017.
In addition, Scanwolf must also ensure that all its directors and relevant personnel attend a training programme in relation to compliance with the Main LR pertaining to financial statements.
"While Bursa Malaysia Securities has not found any of Scanwolf's directors to have caused or permitted the breach by the company, Bursa Malaysia Securities wishes to highlight and remind that it is the duty of the directors to maintain appropriate standards of responsibility and accountability in ensuring compliance of the Main LR," it added.
Paragraph 9.16(1)(a) of the Main LR stipulates that a listed issuer must ensure that each announcement made is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.
Scanwolf's shares fell 4.84% on Friday to 29.5 sen with some 70,000 shares changing hands.