Absentee auditor
AUDIT firm PKF, which was appointed by London Biscuits Bhd to conduct an independent assessment report (IAR) on several key audit matters, did not turn up for a board meeting called by the company where its report was to be presented.
In a stock exchange filing, the biscuit maker said that it “wishes to update, that the board had invited PKF to attend the board meeting of the company which was held on Sept 19 for presentation of the IAR, and thereafter for clarification and explanation on certain matters, but PKF did not attend the board meeting as invited.”
Due to the absence of PKF at the board meeting, London Biscuits added that the board could not deliberate on the items on the agenda.
“Hence, the board have agreed to prepare and forward the queries in writing to PKF,” it stated.
It is unfortunate that PKF did not attend the meeting, which would have been a good starting point to resolve the issues weighing on the company, which lapsed into Practice Note 17 category two months ago.
London Biscuits appointed PKF in March to undertake an independent assessment of five issues, which were raised by its external auditor, Nexia SSY when the latter issued a qualified opinion on the company’s financial statements for financial year 2018.
These were on company inventories, related-party transactions (RPTS), acquisitions of plant and machinery, account balances and an impairment loss.
On Sept 4, the company announced that PKF had completed its independent assessment. The review showed there was a discrepancy in the values of the company’s property, plant and equipment. But the company did not disclose the details of the discrepancy in its property, plant and equipment.
On inventories, PKF opined that it is not uncommon for auditors to quality the accounts, as the external auditor was only appointed two months after the financial year-end, and so it was unable to observe the financial year-end count. It also said that the transaction between London Biscuits and Secret Ingredients Sdn Bhd was not in the commercial interest of the public-listed company, although it opined that there was no RPT between the two.
Written queries take time. Wouldn’t it have been better for a PKF representative to have attended the meeting to answer any clarification the company has?