ASL Marine Holdings
ASL Marine Holdings' independent auditor has raised "material uncertainty" about the group's ability to continue as a going concern, the marine and investment holding company announced yesterday. Auditor Ernst & Young (EY) highlighted that for the year ended June 30, the group incurred loss after tax of about $145.9 million, with its current liabilities exceeding its current assets by $20.8 million.
As at end June, the group's total borrowings, including those of subsidiaries, totalled $363.1 million, of which $46.3 million were classified as current liabilities, while the company's total borrowings came up to $173.3 million, with $12 million classified as current liabilities.
These factors indicate "material uncertainty" which may cast "significant doubt" on ASL Marine's ability to continue as a going concern, EY said. The auditor added that the industry in which the group operates "remains weak in terms of volume and margins", with poor demand for various classes of vessels in the chartering fleet, including offshore support vessels. "This gives rise to financial statements risk, such as impairment of the group's vessels, as well as the determination of the net realisable value of finished goods, the recoverability of finance lease receivables, trade receivables and goodwill," EY said.
Internal auditor RSM Risk Advisory has conducted an independent review of Pacific Star's internal controls after revenue for the sale of 17 property units were included in its third-quarter and second-quarter 2019 financial results, despite risks of non-fulfilment by buyers. The units are part of Puteri Cove Residences, a Malaysian property development by the company's wholly owned indirect subsidiary, Pearl Discovery Development.
RSM was brought in by Pacific Star's audit committee after the group financial controller brought these lapses to its attention. RSM identified six lapses and deficiencies in the firm's standard operating procedures and transactions, and said that sales policies and procedures were not reviewed regularly, or at least once a year.
Certain control activities were not clearly outlined in the sales policies and procedures, like criteria to assess potential buyers beyond obtaining a copy of the buyer's identification.
Among other issues, RSM flagged the lack of a timeline for lenders to follow up with the agent or potential buyer regarding bank loan applications and that there was no requirement to document and file bank loan documents.