KUALA LUMPUR (Nov 1): GIIB Holdings Bhd's external auditor Messrs Grant Thornton Malaysia PLT has expressed a qualified opinion on the rubber compound and related product manufacturer's financial statements for the 18-month period ended June 30, 2022.
The auditor also indicated its intention to not seek reappointment at the group's forthcoming annual general meeting.
In a Bursa Malaysia filing on Tuesday (Nov 1), GIIB said Grant Thornton had expressed the qualified opinion due to the impairment of assets related to the group's 51%-owned subsidiary GIIB Healthcare Products Sdn Bhd (GHP), as well as staff cost in wholly-owned subsidiary Big Wheel Green Tyres Sdn Bhd.
In GHP, Grant Thornton noted that there was a debt of RM24.81 million owed to GIIB and RM30.69 million carrying amount of asset work-in-progress for the construction of glove production lines.
"We were unable to obtain sufficient and appropriate audit evidence to satisfy ourselves on the reasonableness of the various assumptions made by the directors in the discounted cash flow projections to justify the recoverable amount of the PPE (property, plant and equipment) of the group, cost of investment in GHP and amount due from GHP.
"This is particularly on the assumptions of the revenue and corresponding cost of sales applied in the five years discounted cash flow projections. Consequently, we are unable to determine whether any impairment adjustment is necessary to these balances," said the auditor.
For Big Wheel, Grant Thornton said GIIB's directors were unable to provide documentary evidence in relation to staff cost, which amounted to RM432,382.
GIIB said it will seek professional advice on additional procedures or alternative assessment to address these issues.
The group also maintained that transactions related to staff cost were properly supported and available for inspection. However, the documents were not provided timely due to internal miscommunication with the auditor.
"The company will provide the documents to the incoming auditor for their verification accordingly," it said.
On the proposed change of auditor, GIIB said it is taking necessary steps to appoint a new auditor to succeed Grant Thornton. "Further announcement will be released in due course once the proposed appointment has been confirmed."
Last month, independent investigative accountant Ferrier Hodgson MH Sdn Bhd (FHMH) found no fraudulent transactions or misconduct by GIIB as alleged by former executive director Wong Weng Yew.
According to GIIB, FHMH's investigation found that there was insufficient evidence to support the allegation that there was collusion to defraud GIIB's wholly owned subsidiary GIIB Rubber Compound Sdn Bhd (GRC). The divestment was properly accounted for and disclosed in GRC's records and occurred before Weng Yew joined the company's board in February 2021.
FHMH was appointed by GIIB in July to undertake a forensic investigation into four suspicious transactions highlighted by Weng Yew, who was suspended from his executive directorship on March 28. He was redesignated as non-independent non-executive director on May 27.
Weng Yew filed a suit against GIIB, as well as three members of the board — executive chairman and chief executive officer Tai Boon Wee and his sons Tai Qiyao and Tai Qisheng — as well as Alison Wong Ping Kiong, who is the executive director of GRC. Weng Yew is also seeking a declaration that his suspension and termination as executive director taken by GIIB are null and void, among others.
Shares of GIIB closed unchanged at seven sen on Tuesday, giving it a market capitalisation of RM41.39 million.