Kenyataan Media
BURSA MALAYSIA SECURITIES PUBLICLY REPRIMANDS VIZIONE HOLDINGS BERHAD (FORMERLY ASTRAL SUPREME BERHAD) AND FINES 8 OF ITS FORMER DIRECTORS A TOTAL OF RM1,112,000
KUALA LUMPUR, 23 DECEMBER 2016 - Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) publicly reprimands Vizione Holdings Berhad (formerly Astral Supreme Berhad) (ASUPREM or the Company) and 9 former directors for breaches of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, 8 out of the 9 former directors are fined a total of RM1,112,000.
ASUPREM is publicly reprimanded for committing the following breaches of the Main LR:-
paragraph 15.27(1) of the Main LR which requires a listed issuer to establish an internal audit function which is independent of the activities it audits. ASUPREM had failed to establish an internal audit function during the financial year ended 31 December 2011 and 31 December 2012 (FYE 2011 and FYE 2012) until the appointment of a new internal auditor on 15 March 2013;
paragraphs 15.12(1)(e) and (f) of the Main LR which state that a listed issuer must ensure an audit committee review the following and report the same to the board of directors of the listed issuer:-
- the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work; and
- the internal audit program, processes, the results of the internal audit program, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.
The Audit Committee of ASUPREM had failed to review the adequacy of the internal audit function and internal audit plan and/or report during the FYE 2011 and FYE 2012;
paragraphs 2.18(1)(a) and (c) of the Main LR in respect of the representations in the Statement of Risk Management & Internal Control and the Audit Committee Statement contained in ASUPREM’s annual reports for FYE 2011 and FYE 2012 submitted to Bursa Securities on 6 June 2012 and 4 June 2013 respectively which were inaccurate and particularly misleading with regard to the internal audit function / activities carried out during the FYE 2011 and FYE 2012;
paragraph 15.23 of the Main LR for failing to ensure that the external auditors reviewed the Statement of Risk Management & Internal Control in the annual reports for FYE 2011 and FYE 2012;
paragraph 9.23(2) of the Main LR for failing to submit the annual audited financial statements for the financial year ended 31 December 2013 (AFS 2013) on or before 30 April 2014. The AFS 2013 was only submitted on 30 May 2014; and
paragraph 9.16(1)(a) of the Main LR for failing to ensure that the unaudited results in the quarterly report for the financial year ended 31 December 2013 (QR Dec 2013) announced on 28 February 2014 was, amongst others, accurate and contained sufficient information to enable investors to make informed investment decisions. ASUPREM had reported an unaudited loss after tax and minority interest of RM10.08 million in the QR Dec 2013 as compared to an audited loss after tax and minority interest of RM25.58 million in the AFS 2013 issued on 30 May 2014 which represented a deviation of approximately 154% or RM15.5 million.
The Company is also required to review and ensure the adequacy and effectiveness of its financial reporting function and carry out a limited review on its quarterly report submissions. The limited review must be performed by the Company’s external auditors for four quarterly reports commencing no later from the quarterly report for the financial period ended 31 December 2016. In addition, the Company must ensure all its directors and the relevant personnel attend a training programme in relation to compliance with the Main LR particularly pertaining to financial statements.
9 former directors of ASUPREM (i.e. directors at the material time of the breaches) are publicly reprimanded and/or imposed with the following fines for committing the breaches of paragraphs 2.18(1)(a) and (c) and/or paragraph 16.13(b) of the Main LR for permitting ASUPREM to commit the IA Breaches (i.e. the breaches at paragraphs (1) to (3) above) and/or the Financial Reporting Breaches (i.e. the breaches at paragraphs (5) and (6) above):-
No. | Directors | Breaches | Penalties |
---|---|---|---|
1. | Ong Tai Chin @ Wong Tai Chin Executive Director appointed on 20 September 2011, re-designated to Managing Director on 10 November 2011 and Non-Independent Non-Executive Director on 24 January 2014 Resigned on 5 March 2014
| IA Breaches | Public Reprimand & Fine of RM30,000 |
Financial Reporting Breaches | Public Reprimand & Fine of RM510,000 | ||
2. | Cherng Chin Guan Executive Director appointed on 17 April 2009 Resigned on 7 November 2014 | IA Breaches | Public Reprimand & Fine of RM30,000 |
Financial Reporting Breaches | Public Reprimand & Fine of RM260,000 | ||
3 | Lee Heng Khen Independent Non-Executive Director appointed on 17 March 2010, re-designated to Independent Non-Executive Chairman on 10 November 2011, Executive Chairman on 14 February 2012, Executive Director on 21 December 2012 and Non-Independent Non-Executive Director on 5 March 2014 Resigned on 7 March 2014 | IA Breaches | Public Reprimand & Fine of RM20,000 |
Financial Reporting Breaches | Public Reprimand & Fine of RM104,000 | ||
4. | Yap Chi Keong Independent Non-Executive Director appointed on 24 August 2009 and re-designated to Independent Non-Executive Chairman on 21 December 2012 and Independent Non-Executive Director on 3 March 2014 Audit Committee member appointed on 24 August 2009, re-designated to Audit Committee Chairman on 23 November 2009, Audit Committee member on 21 November 2012 and back to Audit Committee Chairman on 3 March 2014 Resigned on 7 November 2014 | IA Breaches | Public Reprimand & Fine of RM40,000 |
Financial Reporting Breaches | Public Reprimand & Fine of RM29,000 | ||
5. | Wee Tiew Toon Independent Non-Executive Director appointed on 17 April 2009 Audit Committee member appointed on 23 February 2010 Retired on 26 June 2013 | IA Breaches | Public Reprimand & Fine of RM40,000 |
6. | Dato’ Sri Ooi Chieng Sim Executive Director appointed on 1 October 2010 and re-designated to Non-Independent Non-Executive Director on 16 August 2011 Resigned on 28 February 2012 | IA Breaches during the FYE 2011 until his resignation on 28 February 2012 | Public Reprimand |
7. | Abdul Gaffor bin Sahul Hamid Non-Independent Non-Executive Director and Audit Committee member appointed on 26 August 2011 Retired on 29 June 2012 | IA Breaches during his tenure from 26 August 2011 to 29 June 2012 | Public Reprimand & Fine of RM10,000 |
8. | Dato’ Siew Boon Yeong Independent Non-Executive Director and Audit Committee Chairman appointed on 21 December 2012 Resigned on 25 July 2013 | IA Breaches (on the misstatement in ASUPREM’s annual report for FYE 2012 only) | Public Reprimand & Fine of RM10,000 |
9. | Edlin bin Ghazaly Independent Non-Executive Director / Chairman and Audit Committee member appointed on 26 June 2013 Resigned on 7 November 2014 | Financial Reporting Breaches | Public Reprimand & Fine of RM29,000 |
The finding of breach and imposition of the above penalties on ASUPREM and the aforementioned directors are made pursuant to paragraph 16.19 of the Main LR upon completion of due process and after taking into consideration all the facts and circumstances of the matter including:-
- the specific function and responsibilities of the directors (i.e. in executive capacity or as an audit committee member) vis-à-vis ASUPREM’s compliance and operation of the internal audit function and financial reporting under the Main LR;
- the knowledge and conduct of the directors; and
- the materiality of the breaches i.e. the timely as well as accurate disclosure of information is of paramount importance in ensuring a fair and orderly market for securities traded on Bursa Securities and necessary to aid informed investment decisions while the requirement for listed companies to establish and maintain an internal audit function is crucial as it plays an important part in the effective governance and risk and control framework of a listed company.
Bursa Malaysia Securities views the contraventions seriously and reminds the Company and its Board of Directors of their responsibility to maintain the appropriate standards of corporate responsibility and accountability to its shareholders and the investing public.
BACKGROUND
(I) BREACHES IN RELATION TO INTERNAL AUDIT FUNCTION
Based on the facts and circumstances procured during investigation, Bursa Malaysia Securities noted that:-
- Since the last internal audit report that was tabled at both the Audit Committee and Board meetings on 23 November 2010, there was no internal audit report tabled thereafter until 28 May 2013; and
- At every Audit Committee and Board meetings, the item / area of internal audit was always raised / highlighted including information that there was no audit / activities and report from the internal auditors indicating the absence of any internal audit function during the FYE 2011 and FYE 2012; and
- The various audit activities / monitoring carried out by the Company during the FYE 2011 and FYE 2012 including by Sirim QAS International Sdn. Bhd. and internally by its subsidiary’s Chief Operating Officer were inadequate and did not fulfil the obligations under paragraphs 15.12(1)(e) and (f) and 15.27(1) of the Main LR.
Despite the directors’ awareness of the state of affairs of the internal audit function, the directors had failed to demonstrate reasonable steps / efforts taken to ensure that ASUPREM complied with paragraphs 15.12(1)(e) & (f) and 15.27(1) of the Main LR including to undertake reasonable enquiries, supervise / monitor / follow-up on the progress and actions taken as well as undertake other proactive steps towards addressing the issue on the internal audit function expeditiously. The directors’ conduct of merely reminding the management and total / mere reliance on the management / external auditors tantamount to abdication of their responsibilities.
Further, the directors had proceeded to approve the following statements reported in the Company’s annual reports for FYE 2011 and FYE 2012 which were inaccurate and particularly misleading with regards to the Company’s internal audit function / activities carried out during the FYE 2011 and FYE 2012:-
a) In the Statement of Internal Control and Risk Management
- “The Board has engaged an independent firm of consultants to assist in reviewing and appraising the internal control system within the Group so as to ensure that the Group’s system of internal control is effective and adequate”;
- “Based on an internal audit plan approved by the Audit Committee, scheduled internal audits were carried out during the financial year”; and
- “Accordingly the findings of the internal audit, including the recommended corrective actions were presented directly to the Audit Committee”.
b) In the Audit Committee Statement
- “The internal audit function has been outsourced to an independent professional firm which reports directly to the Audit Committee”;
- “During the financial year, the internal auditors reviewed the following processes of the subsidiaries:
- Risk evaluation;
- Review the adequacy, integrity and effectiveness of system of internal controls;
- Review extent of compliance with the Group’s policies and procedures and regulatory requirements;
- Review key business process and areas, covering procurement and inventory and update on action plans in response to the significant audit findings raised in the past internal audit reports with the objective of improving the Group’s operations.”; and
- “The AC had during the financial year reviewed and discussed the major issues raised in the internal audit reports, audit recommendations, management response and actions taken to strengthen the status of internal controls of the Group”.
ASUPREM had also failed to comply with paragraph 15.23 of the Main LR where the Company failed to ensure that the external auditors reviewed the Statement of Risk Management & Internal Control in the annual reports for FYE 2011 and FYE 2012.
(II) FINANCIAL REPORTING BREACHES
The delay in the announcement of AFS 2013 and issuance of inaccurate QR Dec 2013 were essentially due to the inability / failure of the Company to provide the relevant information and supporting documents to substantiate the transactions as requested by the external auditors. The inability / failure to provide and hence, resolve the audit issues had led to the inability of the external auditors to finalize the audit and the AFS 2013 as well as appointment of a special auditor to carry out an investigative audit on 30 April 2014. Upon completion of the investigative audit on 29 May 2014, the Company had on 30 May 2014 submitted the AFS 2013 which took into account the adjustments resulting in the AFS 2013 being subjected to a qualified opinion by the external auditors.
The directors had failed to take reasonable steps including undertake reasonable enquiries, monitoring and supervision of the management towards addressing and resolving the issues / concerns raised by the external auditors expeditiously and comprehensively which had resulted in the issuance of the inaccurate QR Dec 2013 to the market and the delay in submission of the AFS 2013.
In this respect, the directors had proceeded to approve the QR Dec 2013 on 28 February 2014 without reasonable enquiries and assessment of the audit issues notwithstanding that the external auditors had highlighted the anomalies or ‘unusual’ sales transactions at the meeting and the directors knew or should have known of the possible implication / magnitude and severity of the audit issues vis-à-vis the accuracy of the information set out in the QR Dec 2013. Further, there was failure / delay in providing the necessary information and documents as requested by the external auditors as well as take other appropriate actions to address the issues raised towards the finalization of audit despite sufficient notice being given to the Company and directors since 28 November 2013 (i.e. approximately 6 months prior to the deadline for the submission of the AFS 2013) and various reminders prior to the due date of submission of the AFS 2013. It was further noted that despite the management’s failure to resolve the issues with the external auditors, the directors had relied and continued to rely on management which were not acceptable in the discharge of their obligations and tantamount to abdication of their responsibilities.