AirAsia X auditors find financial irregularities

PETALING JAYA: Just two years after AirAsia X Bhd got listed on the Main Board of the local stock exchange, the long-haul, low-cost carrier announced yesterday that internal and external auditors recently discovered certain payments were made between 2010 and 2014 to a service provider for “fictitious services”.
The airline’s stock closed up 1 sen at 16 sen yesterday. Some 19.16 million shares changed hands. Its shares were listed at RM1.25 apiece.
AirAsia X said the discovery of irregular dealings were made in the course of statutory audit for the financial year ended Dec 31, 2014.
The carrier told Bursa Malaysia that it had appointed PwC Consulting Services Sdn Bhd (PwCCS) to conduct a forensic audit on the recommendation of its audit committee. It also found that the payments were authorised by a person in a management position within the company.
In the course of the forensic audit, AirAsia X said, PwCCS discovered 24 payments amounting to RM7.01 million were made to a service provider for “fictitious services”.
AirAsia X has sought legal advice on the possible courses of action the company can take to recover the losses. It has also lodged a police report and reviewed the current internal control process to ensure that similar transactions will not recur.
It said it could not make any announcement earlier about the irregularities as it did not have sufficient evidence to substantiate the allegations and to assess with certainty the financial and operational impact on the company.
However, AirAsia X is of the opinion that the amount involved in the irregularities does not have any material financial or operational impact on the company.
Recently, AirAsia X announced that its net loss extended to RM132.94 million in the second quarter ended June 30, 2015 from a net loss of RM128.79 million a year earlier mainly due to a stronger US dollar exchange rate.
The associate of AirAsia Bhd posted a 2.7% dip in revenue to RM653.03 million from RM671.61 million in the same quarter, mainly due to fewer scheduled flights including fuel surcharges as a result of fewer passengers flown.