The livelihoods of about 1,200 Sabah Forest Industries (SFI) employees in Sipitang are in the hands of the Receiver and Manager, Grant Thornton Consulting (GTC) in Malaysia, after a potential sale of the company’s assets to a local company was brought to an unexpected halt.

Yet, we ask if GTC is really the right party to be involved in the SFI deal because the consulting firm contravened protocols involving the sale of the SFI assets. Not only that, just recently the Financial Reporting Council (FRC) put the audits from Grant Thornton (GT) under scrutiny. Why? Because the annual inspection showed a shocking drop in standards.

The standards were so bad that they announced an overhaul of their audit business as the rot had become too deep to fix. The areas that GT failed included consistency in the work team procedures, the rigour of their judgments and the effectiveness of their audit. Only 50% of GT’s  audits were considered good, and in an assessment of 11 audit firms, GT  was the worst. It seems almost absurd to allow them to handle money in any form.

Managing finances are the basic requirements to fulfil for an audit business to function, and yet we wonder how long GT had kept their incompetence under wraps from their clients and FRC? GT’s auditing was so bad that they missed £94 million in accounting irregularities for one of their clients – a client who is considering bringing them to court for their incredible failure.

If they are willing to overlook incompetence and inconsistency in one of their business sectors, can we trust them to be effective in any other related disciplines?

If GT is willing to breach the trust of clients for tens of millions of dollars abroad, will GTC in Malaysia fulfil its obligations to SFI, when the sums involved in the deal exceed RM1 billion??

We don’t actually have to ask those questions – So far as GTC is concerned, there is a strong indication that they may have acted inappropriately in regard to SFI’s asset sale when they advertised the SFI assets for a second time in the Financial Times, after the first tender exercise was successful and the buyer was in the midst of completing the Sale & Purchase Agreement (SPA).

Have the actions of GTC so far been in the best interest of the SFI employees? Are they trustworthy? We have to wonder especially after they initiated the SPA for SFI, only to turn around a year later and put SFI up for sale again, courting the interest of another party – a China company.  Whether or not they were being ‘pressured’ by certain quarters of the Sabah government, GTC had a responsibility and mandate to act in the best interest of SFI.

They failed in their duties, and because of their ‘delay’ in concluding the SFI deal, they caused the June salary of SFI employees to be delayed. It was only when employees threatened to picket that GTC paid the salaries to the 1,200-odd employees. The question is if they had difficulty to pay the June 2019 salary, where did they finally get the money to pay the 1,200 employees? That presumably runs in millions of ringgit. And where will they get the money next month?

The actions of GTC have been far from satisfactory and it is time the accounting firm is investigated by the Malaysian Institute of Accountants and the FRC to bring the matter to justice – otherwise their clients will continue to suffer from their incompetence.

For more information https://goingconcern.com/u-k-inspection-reports-reveal-that-grant-thornton-cant-audit-its-way-out-of-a-paper-bag/https://economia.icaew.com/news/july-2019/grant-thornton-audit-arm-under-frc-spotlight