Silver Bird released its forensic report on its accounting irregularities last night.
See news report on the Sun Daily: http://www.thesundaily.my/news/391012
Here's the 12 accounting irregularities stated on the pdf file aposted on Bursa Malaysia.
- Trade ReceivablesThe trade receivables of the SBGB Group have been noted to have included incorrect accounting entries that could create a false audit trail, and included the masquerading of inter-bank transfers as payments from the debtors.
- Bread and Supplementary Products
Certain sale of bread and supplementary products were found not to be supported by any physical goods or complete documentation, and hence, may be deemed to exist to increase the sales figures and to possibly serve as a channel for funds as required for working capital to be brought back into the SBGB Group.
- Sweetened Creamer
Purchases for sweetened creamer included sales that were not supported by any delivery of physical goods to the premises of the SBGB Group, but appear to have been contracted with back to back sales to companies suspected to be associated with the financial irregularities of the SBGB Group. These companies include those that may have served as a front for the transactions without the knowledge of the companies concerned.
- Multicom Sales
The irregularities in respect of the Multicom sales are in respect of credit sales when the business was essentially cash based. Further, various credit sales created in the management accounts appear to have been replaced by two other relatively larger debtors for audit purposes.
- BK Fleet Management Sdn Bhd (“BKFM”)
Certain of the trucks used by SMSB are registered in the name of SMSB and are subject to
service agreements with BKFM which allow for BKFM to acquire the trucks for a nominal
sum at the end of the service tenure. Further, there is evidence that some of the trucks
were paid for by SMSB via hire purchase and upon the expiry of the initial service
agreement, the service tenure of the agreement for these trucks was renewed for a higher
net service fee, with the same option for BKFM to purchase the trucks for a nominal sum at
the end of the agreement tenure.
There is a lack of documentary evidence for certain motor spare parts, plus approximately RM986,500 of spare parts that cannot be verified by documentary and physical evidence.
- Bank Reconciliations
The bank reconciling items are numerous, including those arising from unrecorded receipts and payments.
- Bankers’ Acceptances
Numerous sales transactions have been made, without any physical goods, for what appears to be for the purposes of refinancing and raising of bankers’ acceptances.
- Common Party Relationships
Some of the principal activities of the customers and supplier companies with common party relationships would not include the transactions executed with the SBGB Group. Further, the quantum of their transactions with the SBGB Group does not appear to be reasonable when compared with the figures disclosed in the reported financials of the respective companies.
- Destruction of Books and Records
Upon the financial irregularities coming to light, evidence of destroyed documents were uncovered, as were the evidence of computer file deletion and physical damage to the computer hard drive.