KUALA LUMPUR (May 12): China Automobile Parts Holding Ltd (CAP) said its auditors want to verify the company’s value-added tax devices with the relevant tax authorities’ system directly.

In a filing with Bursa Malaysia today, CAP said Messrs PKF also want to complete the verification of the company’s consignment notes or appropriate delivery documentation against the sales invoices.

On April 25, CAP announced that it will miss the April 28 deadline for submission of its FY16 annual report, as its auditors need more time to verify the company's sales details via various regional agents and foreign trade customers.

In its filing today, CAP said the tax system in Fujian, China underwent three major upgrades and reforms within a year and this may have resulted in certain tax information being inaccurate.

“In order to meet PKF’s request, the person in charge of the company is in the midst of liaising with the tax department, so that the auditor can clarify directly with the tax department where necessary,” CAP said.

As the auditors had also requested to seek confirmation with the banks on CAP’s recorded bank balances, the company said it will coordinate and make the necessary arrangement with the bank for PKF to seek confirmation verification where applicable.

With regards to this, CAP said PKF have noted ongoing litigation involving the group and some of its directors whereby certain records indicated that CAP had undertaken significant borrowings and had defaulted in repayment, resulting in a claim and litigation in FY16 by the lending bank.

CAP said it has appointed a lawyer to verify and confirm the litigation cases involving the group and its directors, and will make the necessary announcement in due course.

“The company is in the midst of discussion with its auditors to address the issues and will make further announcements in the development of the above matter in due course,” it said.

CAP’s share price closed unchanged at three sen today, giving the company a market value of RM34.05 million.