KUALA LUMPUR: Apex Equity Holdings Bhd's shareholders have dismissed its external auditor Crowe Malaysia, which recently said it was unconvinced that the company would be able to recover RM23.8 million in loan receivable.
Following its annual general meeting today, almost two-thirds of Apex's shareholders voted out the auditor and acknowledged the company's confidence that the sum was recoverable and had made no impairment loss in its financial statements for the year ended December 31, 2023.
Group executive director Datuk Zakaria Arshad said the qualified opinion expressed by the auditor on April 30 were based on publicly unverified information in assessing the impairment.
He added that that the loan receivable was granted to a qualifying company involved in government-related project.
He explained that the auditor insisted to use some information available online which had suggested that one of the material projects could potentially be terminated despite all relevant information gathered by the company had been presented.
"Having assessed a source of information that the auditor have used in the first place, we disagreed on their approach because the company has taken steps to follow-up directly with the source, cross-check against documents presented to the auditor.
"However, they still insist to use information that is publicly unverified at this juncture in assessing an impairment," he told reporters after the meeting, adding that the auditor gave the company a short timeline of four to five days to seek clarification.
Group deputy chief executive officer Kevin Wong said the disagreement between Apex Equity and the auditor was due to the different approach in their impairment assessment.
"In one of the discussions with the auditor, they told us specifically they will apply the same standard across, no matter if it is government or private project.
"They use the same standard across their impairment assessment but the company took a slightly different view on that because we do acknowledge that government projects carry additional weight," he said.
Zakaria further explained that any termination of government project will go through a long process, including discussing it in the Parliament and if there is some form of compensation.
"The management has been actively engaged with the debtor to ensure they performed their duties and take necessary measures on the repayment plan and corroborated with documentary evidence," he added.
He stressed that Apex Equity is in the position to recover back the loan amount and hence, the recoverability is not a concern and no impairment has been made.
Crowe Malaysia had said it was unable to obtain sufficient appropriate audit evidence to support the recoverability of the sum, citing changes in circumstances after the reporting period that caused a significant deterioration in the credit quality of the loan receivable.
As such, it had expressed a qualified opinion on the company's FY2023 financial statements due to the matter, to declare its opinion about this uncertainty.