Bursa Malaysia orders Serba Dinamik to appoint independent reviewer by Friday

Bursa Malaysia orders Serba Dinamik to appoint independent reviewer by Friday
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KUALA LUMPUR (June 28): Bursa Malaysia has set a deadline for Serba Dinamik Holdings Bhd to appoint an accounting firm by Friday (July 2) to commence special independent review to address the concerns raised by its former external auditor KPMG which resigned last week.

In a statement, the regulator said Serba Dinamik needs to appoint an international accounting firm or an accounting firm with an international affiliation, that has adequate experience and resources, to undertake the task. Furthermore, the accounting firm appointed must have a presence in Bahrain and other overseas locations, where Serba Dinamik's customers and suppliers are located as highlighted by KPMG.

The directive comes as the stock exchange noticed that Serba Dinamik has not announced the appointment of an independent reviewer until now.

Bursa said the directive is given to ensure the audit issues highlighted by KPMG are addressed in a "timely manner and provide clarity to the market".

The regulator also told Serba Dinamik, whose five independent directors resigned last Friday, to ensure that the scope for the special independent review has to be the same as agreed between the audit committee and Ernst & Young Advisory Services Sdn Bhd on June 15, which has been presented to Bursa, or as instructed by Bursa.

In addition, Bursa demands that the appointed accounting firm to undertake the special independent review is allowed to report directly to Bursa Malaysia and the Securities Commission Malaysia periodically on the progress of the review and the findings upon completion of the review.

Serba Dinamik has been in the news in the past one month, after the oil and gas engineering firm on May 25 announced that it wanted to commence an independent review on the audit issues pertaining to its statutory audit flagged by KPMG.

The matters highlighted by KPMG included "trade receivables balances and sales transactions for information technology contracts", the company added.

The audit issues have sent Serba Dinamik's share price to a record low of 32.5 sen today. Some RM4.77 billion market capitalisation (market cap) has evaporated in four weeks. Serba Dinamik's market cap shrank to RM1.205 billion. 

One month has passed and the company has yet to finalise the appointment of an independent auditor to carry out the review. However, over the one month, the company's external auditor resigned after Serba Dinamik filed a lawsuit against KPMG. Subsequently, five independent directors also stepped down.

Rozilawati Basir, Sharifah Irina Syed Ahmad Radzi, Tengku Datuk Seri Hasmuddin Tengku Othman and Hasman Yusri Yusoff resigned due to disagreement on Serba Dinamik's decision to commence legal action against KPMG, according to a filing with Bursa. Meanwhile, Masleena Zaid, who was appointed independent non-executive director on June 11, resigned "due to personal commitment".

Read also:
EY accepts appointment as Serba Dinamik independent reviewer, while co-founder and EPF dump more shares
Serba Dinamik's external auditors flag statutory audit matters, to set up independent review

KPMG quits as Serba Dinamik auditor; it's now up to SC to uncover the truth 
Four Serba Dinamik independent directors resign in protest over company's lawsuit against KPMG