Indeed, how did the huge losses of the energy & utilities division of Sime Darby escape the attention of the audit committee there? ~ Time for real reform By Tony Pereira (Sun, 27 Mar 2011)
"WHEN I was a junior auditor working for one of the Big Four accounting firms in London, the senior partners often used to preach to me about the importance of developing good relationships with the firm’s clients......
I have to confess – I was too intimidated then to ask, exactly who were the firm’s clients ?.....
I always thought that auditors were appointed by the shareholders. Surely they were the clients?..
The problem with the current system of financial reporting is that there is no effective way for the auditors to communicate with their real clients. Yes, legislation does provide various mechanisms by which auditors can communicate to shareholders. In my experience, however, such legislation is more often tested in accountancy exams than in shareholder meetings. Yes, listed companies have audit committees. But that never stopped the Enron bankruptcy; that never stopped Lehman Bros shareholders from losing their investments and why was the audit committee unable to prevent the spectacular fraud at computer services company Satyam? Indeed, how did the huge losses of the energy & utilities division of Sime Darby escape the attention of the audit committee there? " thesundaily.com
Dato' Mohd Bakke Salleh is the President and Group Chief Executive, while Mdm Tong Poh Keow is the Group Chief Financial Officer for Sime Darby, and the questions are directed at them.
|Dato' Mohd Bakke Salleh, Group Chief Executive for Sime Darby|
"An analyst, however, said the appointment of PwC was odd, considering that the firm was also the external auditor of Sime Darby and may not have been quick enough to highlight the possibility that the E&U division was incurring significant cost overruns over the last few years. "~ Sime Darby seeks legal counsel for fraud check - May 28. 2010, The Star
|Mdm Tong Poh Keow, Group Chief Financial Officer for Sime Darby.|
"And what of PwC’s part in the Sime Darby fiasco? Of the four key findings disclosed by Sime Darby on May 13, only one – the decision to reverse revenue of RM200mil for the Qatar Petroleum project – relates to a matter taken up in accounts already audited.
The other three relate to items that have only surfaced in the current financial year. This means PwC could not have known about these figures until it begins auditing Sime Darby’s 2010 accounts. Nevertheless, some in the accounting fraternity say this may be a test case for the newly constituted Audit Oversight Board." In Search of Closure, by Errol Oh, The Star, May 22, 2010
A quick look at the 2010 Annual Report for Sime Darby shows that Sime Darby paid RM 4.2 million in fees for Non Audit Services to PricewaterhouseCoopers.
Even though this amount is less than half of the fees paid for the statutory audit, it is still large enough that most regulators in developed nations will scrutinize the billing closely.
Considering that many analysts and business reporters have raised concerns on the role that PwC plays in the audits for Sime Darby, especially in light of the huge losses in the Energy & Utilities Division, as well as the fact that the former Chairman of PwC heads the internal audit committee in Sime Darby, means that Dato' Bakke Salleh and Mdm Tong Poh Keow will do well to ensure that there is no way anyone can cast any doubts on the latest numbers for the group.
|Chin Kwai Fatt; yet to report this blog to the authorities.|
But then, when we have a situation where the MD as well as the current Chairman of PwC Malaysia, namely Chin Kwai Fatt and Dato' Johan Raslan, in the picture, with unanswered allegations of fraud against them, it can safely be said that Sime Darby and its books will remain under close scrutiny for a while more yet.
|Johan Raslan's sole tweet in January 2011 was DADS, which has since been removed. Just as long as no one else has to tweet the same because of PwC. http://www.urbandictionary.com/define.php?term=dads|