Ernst & Young refuses to give audit opinion for Viz Branz

Here's the reason behind the shocking news.

According to OCBC, in a surprise development, Viz Branz (VB) announced that its appointed auditors, Ernst & Young (EY), will not express an audit opinion for its recently concluded FY12 financial statements.

Here's more from OCBC:

The basis for this disclaimer of opinion stems from earlier allegations of impropriety over a series of payments involving the company made by VB’s former CEO and current top shareholder, Mr. Chng Khoon Peng, which have since been unreservedly withdrawn.

After reviewing the auditor’s note and speaking with management, we deem this development to be a non-issue for VB.

EY cites the lack of access to the earlier complaints lodged with the Commercial Affairs Department (CAD) as one of the reasons for this disclaimer.

In addition, EY stated they were unable to perform audit procedures to “ascertain the nature of transactions” alleged to have been irregular, and if the transactions were properly recorded and presented.

From our understanding – and confirmed with management – investigations into the allegations were not even initiated by the CAD nor was there any indication that it was in the process.

Furthermore, the allegations were about “irregular” payments to the CEO and not fraudulent revenue/profit recognition procedures.

Since its establishment in 1988, this is the first instance where a disclaimer has been issued. Management stands by their FY12 financial statements and stressed that the figures present a “true and fair view” of the company as at end-FY12. VB operations will continue unhindered in the meantime.