SINGAPORE - The entry of incorrect unit costs, understatement of administrative expenses, and insufficient manpower and expertise in the Finance and Accounting department were the three key inadequacies in internal controls which led to lapses in the recording of transactions, said Y Ventures in a filing with the Singapore Exchange (SGX) on Wednesday (Jan 30).
The group was responding to queries from the SGX.
It said that it had faced "higher complexity" in the buying process and documentation of its inventory in 2018, coupled with tight manpower. This resulted in "considerable stress" on its internal control systems and standard operating procedures, said Y Ventures.
It said that it has since taken steps to rectify the problems, which include developing an in-house computerised inventory management system, monthly consolidation of accounts instead of every half a year, and increasing manpower.
The company's audit committee is of the view that the firm's present internal controls are "adequate and sufficient" as the administrative inadvertence were mainly due to inadequate system support and human error.
The audit committee noted that the administrative inadvertence was detected as a result of the group's own internal check as part of its existing control procedures.
Going forward, it aims to convene more regular audit committee meetings in addition to the half-yearly meetings, and continue to engage with its internal auditors.
Y Ventures said that it will request its external auditors to review its full-year results for FY2018 and half-year results announcements for the period ending June 30, 2019.
It is in discussion with its external auditor to test the inventory carrying balance to assist management in the verification of the inventory carrying balance as at June 30, 2019.