Stories of RM4.5bil audit discrepancies untrue, says Serba Dinamik

Serba Dynamik says it has responded to issues raised by its former auditor KPMG.

PETALING JAYA: Claims of audit discrepancies involving RM4.54 billion in Serba Dinamik’s transactions are inaccurate, its CEO has said.

The figure has appeared in numerous reports about the oil and gas company’s ongoing legal dispute with its former external auditor KPMG, which the company claims had raised several trivial issues that have since been responded to.

In an interview with FMT, Mohd Abdul Karim Abdullah said he wanted to set the record straight on the company’s recent auditing issues.

“Everyone has read the information wrongly, the RM4.54 billion consists of items that shouldn’t be added together. You cannot add costs and revenue together, which is how the figure has been derived. This goes against financial literacy.

“Perhaps, people are intentionally trying to sabotage us by exaggerating the numbers. We are not ruling this out,” he said.

On April 12, Serba Dinamik’s board was unable to approve the company’s 2020 accounts after KPMG refused to complete its independent audit until issues it raised were addressed.

However, Karim said that even after management had answered KPMG’s queries, the firm declined to continue its audit.

“Among the issues raised to the board were ‘trivial’ audit issues which our management responded to,” he said.

These issues included the inability to verify documents because auditors went to the wrong address and a receptionist’s failure to confirm a staff member’s existence.

Karim said large companies had thousands of staff and receptionists may not know everyone in the organisation. Subsequent checks by Serba Dinamik confirmed the details of the staff member.

“In other instances, the auditors used the social media app truecaller to verify client contact, and made an issue out of the misuse of abbreviations like LLC versus L.L.C.”

Despite responding to these concerns, Karim said Serba Dinamik was still reported to the Securities Commission, which led to the suspension of its shares’ trading and a loss of RM3 billion in market capitalisation.

“This put the company, its institutional investors, normal shareholders and 7,000 staff members at risk,” he said.

Serba Dinamik’s dispute with KPMG has since gone to court. The company filed a lawsuit against KPMG on June 22, claiming that the auditor “negligently red-flagged some issues”.

On June 24, Serba Dinamik announced that KPMG had resigned as its auditor. Ernst & Young Consulting Sdn Bhd (EY) has since been appointed as its special independent reviewer. - FMT