This article first appeared in The Edge Malaysia Weekly on November 20, 2023 - November 26, 2023

YNH Property Bhd said on Nov 6 that its audit committee intended to appoint a professional firm for an independent review of the company’s joint venture and turnkey construction agreements.

This was revealed in the property developer’s response to Bursa Malaysia when asked its reason for appointing a professional firm to conduct an independent review when YNH had already appointed law firms Benjamin Dawson (BD) and Samir Sumathi Fernando & Co (SSF & Co) on April 3 and April 27 this year respectively to provide a legal opinion on the JV and turnkey construction agreements entered into between wholly-owned subsidiary Kar Sin Bhd and various landowners.

YNH stated that BD and SSF & Co were appointed by the management, and as the inventories related the JV and turnkey construction contracts qualified by the external auditor amounting to RM1.1 billion “were substantial”, the audit committee deemed it appropriate to appoint a professional firm to conduct an independent review and report directly to them. It added that the audit committee was in the midst of finalising the appointment of the professional firm and its scope of work.

On Oct 27, YNH’s external auditor Baker Tilly in its report for the financial period from Jan 1, 2022, to June 30, 2023, had expressed a qualified opinion in relation to the RM1.1 billion worth of inventories pertaining to the JV and turnkey construction contracts.

Given that YNH’s management had appointed BD and SSF & Co in April to review the JV and turnkey construction agreements, and external auditors had flagged the same matter in October, why didn’t the audit committee act faster in getting an independent review done? The findings of the law firms seem inconclusive, with one saying the agreements do not appear to be scams as alleged on the web.

Filings show that two members of the audit committee ceased to be members following their resignation from YNH’s board in May. Left with three members who were only appointed in March, can the minority shareholders look to the audit committee to shed light on the RM1.1 billion worth of inventories?

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