Epicentre auditor withholds opinion; company sets up independent review
AUDITOR BDO has withheld its opinion on Epicentre Holdings' FY2017 accounts due to a lack of appropriate evidence for a number of transactions.
Epicentre, a Catalist-listed Apple reseller, has appointed Deloitte & Touche to carry out an independent review of the issues.
In explaining its disclaimer of opinion, BDO said that it could not verify transactions related to certain consultancy services agreements, including S$3.95 million of income for the year ended June 30 and S$2.5 million of receivables. In particular, the auditor could not ascertain the commercial reasons and economic substance of the consutancy services, the legality and legitimacy of those service agreements and the source of funds that were purportedly received from customers.
BDO also questioned purported advances to and refunds from a supplier in Shenzhen, China, that involved escrow agents owned by Epicentre chairman Lim Tiong Hian and another shareholder of the company. Those transactions included S$4.4 million of advances paid by EpiCentre to the supplier through the escrow agents and S$2.1 million refunded to the group through the escrow agents.
Epicentre also borrowed S$1.76 million at 24 per cent interest from a company owned by a shareholder of the company; that loan was subsequently novated to Mr Lim. BDO said it could not verify the source of funds purportedly received by the initial lender, the legality and legitimacy of the novation agreement, the rationale for novating the loan, and the rationale of a S$400,000 repayment to the initial lender after the loan was novated.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
Hotel Properties prices 5-year notes at 5.1%
Apple to hold launch event on May 7, with new iPads expected
OUE Reit obtains S$600 million unsecured sustainability-linked loan
US: Wall St opens higher as more earnings roll in
GE Aerospace raises earnings goal on strong engine sales
BRC Asia to buy 19.9% of steel reinforcement company for S$16 million