WHILE Serba Dinamik Holdings Bhd has made the right move to engage Ernst & Young Advisory Services Sdn Bhd (EY) as its independent reviewer, the key success factor lies in the scope of the advice sought which should be restricted to the specific audit issues raised by the former’s external auditor KPMG.
“The independent EY opinion should apply the same professional standards expected of any auditor in assessing its stance on those audit issues,” opined Malaysian Institute of Corporate Governance (MICG) deputy president David W Berry in a short statement.
“Any difference will be in the weight given to the surrounding factors. This should not involve a full re-audit of the company.”
Yesterday (June 15), the global integrated oil & gas (O&G) service provider officially agreed to appoint EY as the independent reviewer to assess veracity and accuracy of the matters highlighted by the external auditors, KPMG.
“An updated announcement will be made upon the finalisation of terms and conditions of the said appointment,” Serba Dinamik said in a Bursa Malaysia filing.
According to Berry, the so-called “second opinion” should be sufficient.
“Whether it (EY) agrees with the KPMG opinion or not, both opinions should be made available to shareholders, and the board (especially the independent directors) should also express its view,” he pointed out.
At the end of the day, whether a resolution can be found “is difficult to tell as it will depend on the EY opinion”, according to Berry.
“However, MICG continues to be of the view that any director who is also a shareholder should not participate in any shareholder vote related to this matter or the choice of the company’s auditor,” he noted.
Commenting on EY’s appointment yesterday, the Minority Shareholders Watch Group (MSWG) CEO Devanesan Evanson said this is the company’s right as everyone is entitled to a second opinion.
“There is a difference between opinion shopping and a genuine seeking of a second opinion,” he opined. “It augurs well for the company that the second opinion that they are seeking is from a Big Four accounting firm.”
At 3.53pm, Serba Dinamik was down 4.5 sen or 6.04% to 70 sen with 389.56 million shares traded, thus valuing the company at RM2.61 bil. – June 15, 2021