This article first appeared in The Edge Malaysia Weekly on November 11, 2019 - November 17, 2019

Last Wednesday, Bursa Malaysia classified Ire-Tex Corp Bhd as a PN17 company after it failed to announce to the exchange that its external auditors had expressed a disclaimer of opinion on the group’s financial statements for FY2019 ended June 30.

The disclaimer was only disclosed in its annual report issued on Oct 31.

According to a filing with Bursa, the classification is immediate as the company had failed to announce to the exchange upon triggering the criterion, that is, its auditors had expressed an adverse or disclaimer opinion on the company’s latest audited financial statements, on an immediate basis.

The disclaimer of opinion centred on six areas, leading to its auditors questioning the ability of Ire-Tex to continue as a going concern.

Why did it fail to disclose the material information to Bursa? What were its management and board of directors thinking? Were they not adequately advised by the auditors?

Taking into account the time to prepare the financial statements and for the auditors to complete the audit of Ire-Tex, was there insufficient time for the board to inform Bursa  of the auditors’ disclaimer? It was a good four months from the financial year end to the release of Ire-Tex’s annual report on Oct 31.

This raises concerns over whether there is sufficient oversight by the board and whether it works to provide minority shareholders with fair treatment and protection.

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