Reclassified interest expense led to audit discrepancy: Nico Steel

Mainboard-listed Nico Steel Holdings reclassified interest expense on working capital borrowings as operating activities instead of financing activities following its audit, leading to a discrepancy with its unaudited financial statements, the company said on Thursday in response to a query by the Singapore Exchange (SGX).

With the reclassification of US$133,000 (S$181,000), its net cash used in operating activities as per its announcement was US$135,000, while the figure reflected in its annual report was US$2,000. This amount was instead added to cash flows for its financing activities. As such, the net cash generated from its financing activities was stated at US$890,000 in its announcements, but reflected as US$1.023 million in its annual report.

The metal alloy provider said that the reclassification does not alter the financial results or position of the company as announced on April 25.

The company also said it was satisfied with the auditors for some of their foreign incorporated units. Those auditors were Sukhum International Audit in Thailand and Suzhou Fangben Certified Public Accountants in China. A third auditor, CSY & Associates, audited a subsidiary that is not considered a significant subsidiary of the group and is not required to be audited under the law of its country of incorporation, Nico Steel said.

Baker Tilly TFW, auditor for Nico Steel's consolidated accounts, was also satisfied with those audits, the company said.

A version of this article appeared in the print edition of The Straits Times on June 23, 2018, with the headline 'Reclassified interest expense led to audit discrepancy: Nico Steel'. Print Edition | Subscribe