Kattali Textile did not cooperate with the auditors while they were looking into the company’s financial reports for the year that ended on June 30, 2020.
The management of the company has also failed to provide the required documents regarding realisation and collection of revenue and purchase within due time.
The company’s auditor disclosed the information in its disclaimer of opinion published by the Dhaka Stock Exchange (DSE) yesterday.
“In addition to that, we were unable to perform physical stock count and find no other ways to satisfy ourselves by alternative means concerning the inventory valuation and quantities held as per the statement of financial position,” the auditor added.
Due to the outbreak of the pandemic, the auditors were unable to perform their planned audit work within scheduled timeframe because of lack of cooperation and evidence provided by the management of the company.
The company office and production facility were both declared as ‘red zone’ during the period of the scheduled audit work, it said.
“As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of above mentioned issues which could be pervasive and the elements making up the statement of profit or loss, statements of changes in equity and statement of cash flows.”
The textile company, which was listed in 2018, reported earnings per share of Tk 1.43 for 2020 while it was Tk 1.45 the previous year.
On the basis of these earnings, the company announced 2 per cent cash and 8 per cent stock dividends for the year.
The Financial Reporting Council (FRC) should take action against Kattali Textile because such disclaimer from auditor proves it has some suspicion, said Torikul Islam, a stock investor.
“If the company has no bad intention, then why it did not cooperate with the auditors?” Islam said, adding that its directors were recently penalised so suspicion is logical.
The stock market regulator imposed a penalty of Tk 50 lakh each on the directors of Kattali Textile for noncompliance with securities laws in connection with the utilisation of IPO proceeds, the DSE said in a disclosure published on August 25 last year.
The penalised directors are Md Anwarul Haque Chowdhury, Md Mokarrom Anwar Chowdhury, Eian Apparels and Lucky Corner. Nasreen Hoque, chairman of Kattali Textile, and its managing director Md Emdadul Hoque Chowdhury were also penalised.
The company’s stocks traded at Tk 10.90 yesterday.
Mohammad Mohiuddin Ahmed, executive director of the Financial Reports Monitoring Division at the FRC, said they would soon check why the company did not cooperate with its auditor.
The disclaimer of opinion expresses that the auditor is in the dark about the company due to a lack of cooperation.
“We want to see why the company did not present all the required documents,” he added.
“Our area was locked down due to Covid-19, so the auditors were not able to come physically,” said Sattabrata Das, company secretary of Kattali Textile.
We sent them all documents to check,” he said, adding that the auditors did eventually visited them in last December.
