Thursday February 28, 2013
Frontken reports irregularities
KUALA LUMPUR: Frontken Corp Bhd has informed Bursa Malaysia of potential accounting irregularities noted in one of its wholly owned subsidiaries.
In a filing with the stock exchange, Frontken said Crowe Horwarth, which was appointed as the special investigative auditor, had noted the irregularities.
The first was a discrepancy in the revenue of up to RM5mil recorded in one of the suppliers’ audited financial statements, being substantially less than the cost recorded in the subsidiary’s books in relation to the purchase of goods/services.
The others are non-existent purchases of up to RM2.7mil, a non-existent tenancy entered with one of the suppliers, possible misappropriation of the subsidiary assets, non-existent transactions between one of the suppliers and the subsidiary, the overriding of internal controls and policies and procedures, and the misappropriation of funds of the subsidiary by senior management personnel.
The potential impact is about RM8.7mil, which have already been provided for in the accounts for the six financial years ended Dec 31, 2006, 2008, 2009, 2010, 2011 and 2012, it said.
However, it said the amount for the non-existent tenancy entered with one of the suppliers, the non-existent transactions between one of the suppliers and the subsidiary and the misappropriation of funds of the subsidiary by the senior management personnel, had yet to be ascertained.
As full provisions have been made, the irregularities are not expected to have any financial or operational impact on Frontken.
Frontken said in order to safeguard its assets and interest, its measures included seeking legal advice on the possible course of action to recover the losses, lodging a police report, and reviewing the current internal control process to ensure that similar transactions would not recur. — Bernama