Anomalies spotted in SS Steel financials

Anomalies spotted in SS Steel financials

An auditor has found some inconsistencies in the financials of SS Steel for the year ended on June 30, 2022.

Mentioning some inconsistencies, including violation of Financial Reporting Council (FRC) notification, the auditor has given qualified opinion in its report for FY22.

According to the auditor, the opening and closing balance of the Workers Profit Participation Fund (WPPF) account is not supported by a separate bank account.

"We failed to trace the opening balance amount as well as current year addition (Tk 35,913,469.00)," said the auditor.

He said the company does not have any trustee board in place for the maintenance of the account of the fund.

Asked, Company Secretary of SS Steel Md Mostafizur Rahman said the company is utilising the fund to pay interest.

"The fund will be transferred into a separate bank account ahead of distribution," Mr Rahman said.

The opening balance of the WPPF is Tk 83.27 million while the closing balance is Tk 128.76 million.

As a public interest entity (PIE), the company violated Financial Reporting Council (FRC) notification by not converting share money deposit into lawful share capital within the six-month period from the date of deposit of the amount.

In this regard, the company secretary said the regulatory consent is required to convert share money deposit into share capital. "We will seek regulatory consent soon."

The auditor said the previous auditor did not attain inventory count due to Covid-19 situation and now it finds no alternative means to ensure the closing value and quantity held.

The absence of appropriate supporting evidence, schedules and sequential documents to arrive at Net Realizable Value (NRV) for the closing inventory amount restricts audit workings to decide whether there was any adjustment required to declare the closing inventory free from material misstatement, said the auditor.

"The opening balances of inventory items also have an impact on the estimated cost of goods manufactured," the auditor mentioned.

Among other inconsistencies, the amount under provision in tax expense in the preceding year had not been adjusted in the current year.

SS Steel, presently an 'A' category company, was listed with the bourses in 2019.

It reported a consolidated EPS of Tk 1.87 for FY 22 against Tk. 2.31 for FY 21.

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