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AN internal audit, commissioned by Jason Holdings' audit committee, has found certain lapses and a potential overstatement of about S$2 million in the parquet firm's results for the half year ended June 30, 2015 (HY2015).
The company, which has requested for a voluntary suspension in the trading of its shares on Wednesday, said the internal audit was commissioned following feedback received from an employee in relation to certain operational aspects of its subsidiaries, namely Jason Parquet Specialist (S) Pte Ltd (JPS) and White Cubic Pte Ltd, as well as the general tight cash flow position of the group.
In a regulatory filing on Thursday, CEO Jason Sim Chon Ang shared that the internal auditors found that JPS did not pay the salaries of certain employees on time. In addition, JPS did not comply with certain bank covenants relating to three banking facilities as at June 30, 2015. There were also erroneous submissions of supporting documents for the application of short-term trade facilities.
There had also been lapses in terms of timely and adequate recording of transactions in the group. As a result, JPS had failed to identify omissions in the recognition of cost of goods sold in relation to certain revenue recognised in the unaudited HY2015 ended June 30, 2015.
"The omissions appeared to be primarily due to a system design gap in the enterprise resource planning system. There is, accordingly, a potential overstatement of approximately S$2 million in the profit-and-loss position of the group for HY2015 due specifically to the omissions identified," according to the internal audit report.
Mr Sim said the company has commissioned a review by external auditors and will commission a special independent committee to review the internal audit report. "This review is to ensure that the internal controls are adequate to safeguard the shareholders' investments, the company's assets and ensure the integrity of the company's financial statements," he noted.
On the completion of the review, the special committee will look into the recommendations of the internal auditors and take necessary steps to further strengthen and enhance the internal controls of the group, he added.
Jason Holdings last closed at 6.2 Singapore cents.