KUALA LUMPUR (Jan 31): Lambo Group Bhd’s external auditor has expressed a disclaimer of opinion in the group’s financial statement due to lack of audit evidence on financials relating to its subsidiary Fujian Accsoft Technology Development Co Ltd.
CAS Malaysia PLT expressed the disclaimer of opinion in Lambo’s financial statement for the 16-month period ended Sept 30, 2022, said Lambo in a bourse filing.
China-based Fujian Accsoft, an indirect wholly-owned subsidiary of Lambo, was in the spotlight in July last year when China’s Ministry of Finance said the company’s audited financial statements for 2016, 2017 and 2018 were falsified and a penalty was imposed on its auditor.
CAS Malaysia said it was not able to gather sufficient appropriate audit evidence to verify Fujian Accsoft’s financials up to the date it was deregistered or wound up in China last May.
“We have tried to communicate with the legal representative of the Fujian Accsoft to request for the management account for current period and prior year. However, there has been no reply from the legal representative of Fujian Accsoft,” said the auditor.
“Furthermore, we have communicated with the prior year component auditor of Fujian Accsoft in regards to this matters. They had informed us that they were not appointed as the current financial period auditor and they were unable to contact the legal representative of Fujian Accsoft,” it added.
CAS Malaysia also said it has not received satisfactory responses from Lambo’s directors.
“As we were unable to obtain sufficient appropriate audit evidence on the findings by China’s Finance Ministry and inability of the management to provide the relevant financial statements of Fujian Accsoft, we therefore do not express an opinion on these financial statements,” it said.
CAS Malaysia noted that with Fujian Accsoft deregistered, Lambo has booked a loss on deregistration of RM3.96 million as at Sept 30, 2022.
However, the auditor said it was not able to ascertain the accuracy, completeness and validity of this amount due to the non-availability of Fujian Accsoft financial statements.
CAS Malaysia also raised a matter relating to Lambo’s other investment as its basis for disclaimer of opinion.
The auditor pointed out that Lambo had acquired 212.96 million shares or a 23.27% stake in a public-listed company.
CAS Malaysia opined that this investment should be recognised as “investment in associates and to be equity accounted in Lambo’s financial statements.
However, Lambo’s directors are of the view that this investment should be classified as “financial instruments”.
“Therefore, we were unable to obtain sufficient appropriate audit evidence to ascertain the classification and measurement of the other investment,” said CAS Malaysia.
Lambo’s largest shareholder is Cheetah Holdings Bhd, with a 21.2% stake, followed by Lambo executive director Koo Kien Yoon with 7.05%.
Apart from Koo, Lambo also has another executive director, Chinese national Zhuang GuoHua, who was appointed in May 2017.
With CAS Malaysia’s disclaimer of opinion on Tuesday, Lambo announced that it is now a Guidance Note 3 company, and it is required to submit a regularisation plan to Bursa Malaysia within 12 months.
Shares of Lambo closed half sen or 9.1% lower at five sen on Tuesday, giving the group a market capitalisation of RM77 million.
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