Deloitte & Touche, Xpress Holdings’ auditors, has refused to sign off on its FY2006 accounts. The company subsequently decided to sack the auditors.
The latest development is that ACRA has refused to grant it an extension of time – to get its accounts audited and hold its annual general meeting.
Why the refusal to sign off the accounts? Two main issues.
1. Precise Media Group (PMG)
Deloitte had doubts about certain revenue items recorded in the statements of PMG, and the cost of Xpress’s investment in PMG and the goodwill from the purchase, recorded in Xpress’s books. (Xpress had raised its stake in PMG in June, from 60 per cent to 100 per cent, in a $27.5 million deal.)
2. PMG’s internal control
What is Xpress’ position?
Xpress said they have tried to address Deloitte’s concerns.
Xpress then hired Foo Kon Tan Grant Thornton for a 2nd opinion on its financial results. Foo Kon concluded that ‘Deloitte’s observations are mostly correct’ but added that alternative evidence could be obtained to address those concerns. It was obtained.
Foo Kon ‘indicated its willingness to act as Xpress’s auditors’. Xpress proceeded to ask Deloitte to resign and moved to hire Foo Kon.
The AGM is slated for Jan 15, 2007.
As shareholders of Xpress, would you not be interested in asking Deloitte what have caused the “divorce”? Shareholders should also ask the new “bride to be”, why she would be willing to marry Xpress?
P/S – Edgar has got no shares in Xpress.