Accounting Fraud In Malaysia:DIS Technology Holding BhdAccounting Fraud In Malaysia:DIS Technology Holding Bhd

Accounting fraud in malaysia:DIS Technology Holding Bhd

DIS Techology Holding Bhd (DIST)(0063) which is listed on Bursa Malaysia’s ACE Market,intend to reinstate its financial results in the past few quarters due to an alleged sales fraud in Hong Kong. The fraud is pertaining to billing to an external customer Starlight Marketing Ltd located in Hong Kong.

Append below the HEAVILY overestimated figures on sales and profit before tax(extracted from Bursa Saham):-

Potential Financial Impact to Sales &PBT Due to Misstatement

DIS Working Capital BEFORE HEAVILY OVERSTATING TRADE RECEIVABLES

As this is an artificial non cash transaction,the double entry is to reverse the group sales and trade receivables leaving an adjusted NET CURRENT LIABILITIES where the group will not able to service its bankers,creditors and other lenders. According to its group managing director Dustin Cheah of the RM131.33 million,the balance still owed to it as of end-December 2009 stood at RM82.07 million. Imagine what is DIS group sales for year ended 31 st December 2009 and 2008 -RM181 million RM139 million,hence this mistatement/fraud has tremendous financial impact to its company financial performance.

A little bit of history of DIS Technology Holding Bhd:

• DIS Technology Holdings Berhad (“DIST”),an MSC status company( achieved MSC status in 2002)
• Listed in MESDAQ or now called ACE in year 2004
• A leading electronic device innovator and trendsetter in Malaysia.
• Located in Penang – the Silicon Valley of Malaysia
• DIST comprises of seven wholly owned subsidiaries – Digital Integrated System Sdn. Bhd. (“DIS”),Dis Technology (HK) Limited,Modern Solution Sdn. Bhd. (“MSSB”) and Zeon Computer (M) Sdn. Bhd,Home Touch Solution (North) Sdn. Bhd.,DIS B2B Int’l (HK) Limited and Unieksoft Solutions Sdn. Bhd.
• Achieved numerous prestigious awards like the Asia Pacific International Honesty Enterprise-Keris Award 2004,Business of the Year Award 2004,Asia Pacific e-Entrepreneur Excellence Brand Award 2005,PIKOM – Computimes ICT Award 2005,PIKOM –Finalist Award in 2006,Asia Pacific Super Excellent Brand 2006 / 2007,5th Asia Pacific International Honesty Enterprise Keris Award 2006,Platinum Recognition for Malaysia’s Top 50 Enterprise Award and Malaysia Independence Award 2009 being the latest accolade.

My two cents worth:

If these fraudulent figures are reinstated,both the income statement and balance sheet will turn very ugly. With this ugly side revealed,investors can then see clearly that DIS group will not be able to services it debts providers/other lenders and if no further fresh capital injection might turn to a PN17 company. However,the question ultimately lies with whats really has happened. In the listing requirement at least one third of the board belongs to non-independent directors but yet this MASSIVE reinstatement happens. We are not talking about kacang puteh figures. Its really quite scary to think of it!  BTW -would you want to be CFO in that group –I bet you will be having nightmares!

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