The Securities Commission (SC) has directed Talam Corporation Berhad (Talam) to re-issue its 2006 and 2007 financial statements by 31 October 2007, for failure to comply with Regulation 4 of the Securities Industry (Compliance with Approved Accounting Standards) Regulation 1999 (Regulations).
Regulation 4 requires every listed corporation to ensure that the consolidated financial statements are to be made out in accordance with approved accounting standards.
Talam’s breach of Regulation 4 involves the adjustments of various transactions in its financial statements for the year ended 31 January 2006 despite Talam’s auditors, Ernst & Young’s inability ‘to obtain sufficient appropriate audit evidence’ to satisfy themselves of the said adjustments. The adjustments had the effect of reclassifying RM90 million of its debtors into property development costs, other liabilities and retained profits brought forward.
This treatment is in breach of the Financial Reporting Standard (FRS) 1012004 Presentation of Financial Statements which requires that financial statements should present fairly the financial position, financial performance and cash flows of an enterprise. In this respect, the SC has directed Talam to reinstate the RM90 million debtors, and reissue its 2006 and 2007 financial statements.
In addition to the re-issuance of its 2006 and 2007 financial statements, Talam is also required to make the necessary announcement to Bursa Malaysia Berhad in respect of the rectification of its 2006 and 2007 financial statements, together with the reasons and effects (financial or otherwise) of its actions.
The SC views non-compliance with financial reporting regulations as a serious matter as high standards of financial reporting are fundamental to market integrity and investor protection.