Sample Disclosure – Auditors’ Report Of Companies With Associates and or Jointly Controlled Entities But Do Not Have Any Subsidiaries (11 November 2009)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ABC BERHAD

Report on the Financial Statements

We have audited the financial statements of ABC Berhad, which comprise the balance sheets as at 30 June 2009 of the Economic Entity and of the Company and the income statements, statements of changes in equity and cash flow statements for the year then ended of the Economic Entity and of the Company, and a summary of significant accounting policies and other explanatory notes, as set out on pages XX to XX.

Directors’ Responsibility for the Financial Statements 

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Audit Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Economic Entity and of the Company as of 30 June 2009 and of their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report that in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

 

 

(Name Of Audit Firm)

[AF: 1234]

Chartered Accountants

 

 

 

(Name Of Partner)

[1234/05/11 (J/PH)]

Chartered Accountant

Wonderland, Malaysia

Date:

 

Note: This sample independent auditors’ report uses the term “Economic Entity” to describe the financial statements comprising the associates and/or jointly controlled entities ONLY with NO SUBSIDIARIES. An entity should define the composition of the “Economic Entity” in the financial statements. Other terms such as “Group” is not suitable to describe such financial statements as “Group” is defined in FRS 127, Consolidated and Separate Financial Statements to include a parent and its subsidiaries. This requirement applies to those companies that need to comply with Financial Reporting Standards in Malaysia and not Private Entities Reporting Standards. For those companies that need to comply with Private Entities Reporting Standards, investment in associates and/or jointly controlled entities are stated in the separate financial statements of the investor at cost or revalued amount.

Sample Disclosure – Note On Investment In Associates (31 May 2009)

INVESTMENT IN ASSOCIATES

Investment in associates consists of:

 

Group

Company

 

2009

2008

2009

2008

 

RM

RM

RM

RM

At Cost:

 

 

 

 

Quoted shares

400,000

400,000

400,000

400,000

Unquoted shares

500

500

500

500

 

400,500

400,500

400,000

400,000

Share of post -acquisition results, net of dividend received

230,128

245,750

Impairment loss

(100,500)

(100,500)

(100,500)

(100,500)

 

530,128

545,750

299,500

299,500

At Market Value

 

 

 

 

Quoted shares

501,850

487,154

501,850

487,154

 

 

 

 

 

The following information relates to the associates which are all incorporated in Malaysia.

 

 

Name of Companies

Effective Equity Interest

 

 

Principal Activities

2009

2008

 

 

 

 

Held by the Company

 

 

 

ABC Berhad

42.00%

42.00%

Investment holding and property development

Held through indirect subsidiary, XYZ Sdn Bhd

 

 

 

EFG Berhad

40.00%

40.00%

Provision of property management services

HIJ Sdn Bhd

40.00%

40.00%

Dormant

 

As at day/month/year, investment in a quoted associate of the Company with carrying value amounting to RMXXX,XXX (2008: RMXXX,XXX) has been charged to a licensed bank for banking facilities stated in Note XX.

The directors are of the opinion that the allowance for impairment loss as of year end is adequate as the carrying value of the investment approximates the net assets of the associates.

The summarised financial information in respect of the Group’s associates are as follows:

 

Group

Assets and liabilities

2009

2008

Current assets

1,820,137

1,756,842

Non-current assets

1,589,630

1,642,693

Total assets

3,411,776

3,401,543

Current liabilities

-2,568,461

-2,948,763

Non-current liabilities

-251,836

164,687

Total liabilities

-2,820,297

-3,113,450

Net Assets

591,479

288,093

The Group’s share of net assets

236,592

115,237

Results

   

Revenue

354,262

249,867

Profit for the financial year

65,317

4,512

 

The results of ABC Berhad and its subsidiaries (“ABC Group”) have been equity accounted for and included in the financial statements of the Group based on the latest audited financial statements.

 

Auditors’ report of the ABC Group for the financial year ended day/month/year

In the auditors’ report, the auditors have included an emphasis of matter in respect of the use of going-concern as the basis for the preparation of the financial statements of the ABC Group.

The auditors reported that the financial statements of ABC Group and have a net current liabilities of RMXXX million and RMXXX million respectively as at day/month/year. However, the financial statements of the ABC Group and of ABC Berhad have been prepared on a going concern basis. The application of the going concern basis is based on the assumption that ABC Group and ABC Berhad will be able to complete the Financial Regularisation Plan within the anticipated timeframe and that the ABC Group will be able to achieve sustainable and viable operations in the foreseeable future and consequently, the realisation of the assets and settlement of liabilities in the normal course of business. In this connection, the directors of ABC Berhad are confident that the Financial Regularisation Plan would be completed successfully within the anticipated timeframe.

Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of assets and the classification of liabilities that might be necessary should ABC Group be unable to continue as a going concern.