For five consecutive financial years, the external auditor of China Ouhua Winery Holdings Ltd has issued a qualified opinion on its financial accounts.
Last week, the Chinese winery announced to Bursa Malaysia that its external auditor had done it again with regard to the group’s financial statements for the financial year ended Dec 31, 2017 (FY2017).
UHY Lee Seng Chan & Co said it was unable to obtain sufficient appropriate audit evidence on the extent of recoverability of a deposit of RMB118.8 million used for a contract to purchase land and property in China. The contract was signed in December 2013.
The sum has been an issue with the company’s external auditor since FY2013, and issuing a qualified opinion seems to have become an annual event for the winery.
This is not the first time this column has highlighted the matter.
Earlier this month, China Ouhua announced it had been informed by the Land Commission office in Yantai City, China, that its application for the transfer of land ownership is in the process of being approved and should be completed within the next month.
It would be great if the company could obtain the land title next month. If not, should the regulators in Malaysia consider taking steps to end this issue? Otherwise, we migh see China Ouhua make the same announcement again around the same time that its external auditor has expressed a qualified opinion on its accounts.