M3 Technologies' auditor issues qualified opinion on FPE21 financial position

TheEdge Mon, Aug 30, 2021 08:43pm - 2 years View Original


KUALA LUMPUR (Aug 30): M3 Technologies (Asia) Bhd's external auditor Messrs Ecovis Malaysia PLT has expressed a qualified opinion in the company's audited financial statements for the financial period ended March 31, 2021 (FPE21).

On March 25, M3 Tech had changed its financial year end from Dec 31 to March 31, which it attributed the change to insufficient time to appoint a new auditor following the resignation of Jamal, Amin & Partners as its auditor. Thus, FPE21 will be for a period of 15 months from Jan 1, 2020 to March 31, 2021.

According to the independent auditor’s report attached with M3 Tech's filing with Bursa Malaysia today, Ecovis Malaysia said the basis for its qualified opinion was due to the ACE Market-listed mobile value added services provider appointing an independent investigative auditor to review specific transactions and related accounting entries in the financial years ended Dec 31, 2017 and 2018 (FY17 and FY18) to ascertain whether there were any fraudulent transactions involved in M3 Tech's business operations and certain of its subsidiaries and any irregularities involving a former director and the potential financial impact.

"Based on the directors’ assessment, impairment losses on trade receivables related to these alleged dubious transactions amounted to RM985,061 have been recognised during FY19.

"The directors also assessed that any potential losses in connection with those alleged dubious transactions have been fully recognised during FY17 to FY19 and all outstanding balances, if any, relating to those alleged dubious transactions have been fully reversed or impaired as at Dec 31, 2019. Accordingly, the directors concluded that those alleged dubious transactions would not have material financial impact on current period financial statements," it added.

Ecovis Malaysia noted that however, at the date of approval of the financial statements, the investigative auditor was in preliminary stages of review.

Consequently, it was unable to determine the potential financial impact, if any, to the group and the company in respect of those alleged dubious transactions and whether any adjustments might be necessary to the impairment losses amounting to RM985,061 recognised by the group in FY19, and trade receivables and opening balance of retained earnings as at Jan 1, 2019.

Meanwhile, M3 Tech said it will follow up the investigation conducted by the investigative auditor. "Any material development in this matter will be disclosed accordingly," it said, adding that it expects to resolve the issue relating to the matters above within two months.

M3 Tech shares closed down 0.5 sen or 7.69% at 6 sen today, bringing a market capitalisation of RM49.93 million. Its share price has fallen 57.14% over the past year from 14 sen on Sept 1, 2020.

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