Auditor qualifies Iris' FY17 accounts on lack of info on subsidiaries

PETALING JAYA: Iris Corp Bhd’s external auditor Messrs Baker Tilly Monteiro Heng has expressed a qualified opinion on the company’s financial statements for the financial year ended March 31, 2017 (FY17) on lack of information on subsidiaries.
In the independent auditors’ report dated July 31, 2017, it said it was unable to perform appropriate audit procedures to obtain sufficient and appropriate audit evidence that it considers necessary for the company’s subsidiaries during its audit.
“Therefore, we could not determine whether any adjustments were necessary in respect of the unaudited management accounts of the subsidiaries and the effects, if any, on the financial position of the group as at March 31, 2017 or on its financial performance and cash flows for the financial year then ended,” it said.
These include the impairment loss of property plant and equipment of RM50.98 million and the impaired goodwill of RM17.15 million in respect of the Koto Industrial Building Systems and education segments.
The auditors said that the audited financial statements of the group have been consolidated using the unaudited management accounts of the subsidiaries for FY17, as the audited financial statements and auditors’ report of the subsidiaries were not available.
Key audit matters highlighted by the auditors are the group’s ability to continue as a going concern, the arrest of Iris’ deputy managing director and investigation by the Malaysian Anti-Corruption Commission, trade receivables amounting to RM215.61 million after recognising impairment loss of RM94.43 million in FY17 and goodwill amounting to RM128.27 million.
The auditor also highlighted the group’s divestment of non-core activities in FY17 which saw the group recognising impairment losses of RM14.56 million for other investments and RM63.19 million for other receivables, deposits and prepayments in relation to the potential foreign property development investments.
The group’s inventories amounting to RM72.48 million were also highlighted. The auditors said the group’s inventories are measured at the lower of cost or net realisable value and judgement is required in estimating their net realisable values and identifying slow-moving inventories.
Iris’ share price closed unchanged yesterday at 17 sen with a total of 7.94 million shares traded, giving it a market capitalisation of RM420.22 million.