KUALA LUMPUR: The onus is on the board of directors of Serba Dinamik Holdings Bhd to answer accordingly to the issues surrounding its audit, said the Institute of Corporate Directors Malaysia (ICDM) today.
ICDM chairman Tan Sri Zarinah Anwar said the oil and gas service provider's board must respond in a satisfactory manner to issues raised by the auditors.
"You cannot try to side step because they are your external statutory auditors and that is their job to raise red flags.
"We have seen that the board does not do this (respond to the issue, resulting in) the shareholders voting with their feet, and overnight, there is collapse in the share price, which diminished its market capitalisation," she told a virtual media conference after the ICDM's fourth annual general meeting (AGM) today.
Also present was ICDM president and chief executive officer Michele Kythe Lim.
In late May, Serba Dinamik's auditor KPMG raised issues on the more than RM3.5 billion of contracts and transactions that it had not been able to verify with 11 customers.
In its response, Serba Dinamik said it saw no issue concerning the legitimacy and existence of the contracts and it did not expect any material impact in the financial year ending June 30, 2021.
The company has appointed Ernst & Young Advisory Services Sdn Bhd as the independent reviewer to assess the veracity and accuracy of the matters highlighted by KPMG as well as appointed three new independent non-executive directors.
Zarinah stressed that it is important for the Serba Dinamik board to exercise professionalism in responding to legitimate queries that have been raised by the auditors.
"Communication also has got to be speedy. You cannot wait a long time until the adverse impact has occurred and then only communicate. You have to communicate. You have to communicate and then to preempt any adverse impact from actions taken.
"Second point I would like to make is about the competencies of the directors. They have to preempt these kinds of crises that will impact on the company. We will never know when a crisis might happen," she pointed out.
Meanwhile, Lim said 2020 was a bumpy ride for all businesses and ICDM was not spared.
“Speed was of the essence and our priority was to ensure that we were able to effectively cater to the needs of our members whilst keeping the momentum of the progress made so far.
“Very often, it was back to the drawing board to determine the different delivery methods, to ensure the efficacy of our efforts,” she added.
In conjunction with the AGM, the ICDM published its second ICDM Report covering progress and key organisational milestones for the financial year ended Dec 31, 2020 (FY2020), as well as for the period from January to April 2021 to reflect the most current updates.
Amongst notable highlights were the growing ICDM membership base with 671 individuals and 50 corporate members, 132 sessions of virtual director development programmes, and the release of the inaugural Malaysia Board Diversity Study.
Looking forward, ICDM will continue to expand and deepen its director talent pool as well as empower more board candidates, whilst encouraging and facilitating cross-border directorships.
To this end, ICDM is working with other institutes of directors in ASEAN to establish an ASEAN Director Network to serve the growing needs of the regional markets as well as to offer ASEAN board candidates to the rest of the world. - Bernama
