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Auditor gives 'qualified' opinion on PGCB's financial report

'Inventory register not maintained properly'

FE Report | December 07, 2018 00:00:00

The auditor has given 'qualified' opinion on the financial statement of the Power Grid Company of Bangladesh Ltd. (PGCB), as the report for the year ending on June 30, 2018, contains incomplete information.

A qualified opinion is a statement issued after an audit is completed by a professional auditor, suggesting that the information provided is limited in scope or the company being edited has not maintained generally accepted accounting principles.

As per the qualified opinion of the auditor, no fixed asset register with the required information of the PGCB was available.

As the company did not maintain the inventory register properly, the auditor was unable to confirm the physical existence of the items of inventory and its value as on 30 June 2018.

The auditor said the earnings per share (EPS) and the net asset value (NAV) for the year 2017-2018 would have adversely been affected if provisions were made for 'disputed' amounts.

Besides, some items of the property, plant and equipment (PPE) have been received from the Bangladesh Power Development Board (BPDB) and the Dhaka Power Distribution Company (DPDC) by the PGCB without conducting physical verification and valuation thereon, according to the auditor.

According to the auditor's qualified opinion, PPE was reported at over Tk 115.12 billion.

"No fixed asset register with the required information was available," the auditor said in its opinion posted on the website of the Dhaka Stock Exchange (DSE).

The auditor has also said that no physical verification of the PPE was conducted either at the year-end or any time during the period under audit. "…. we are unable to confirm the authenticity of the physical existence of PPE as of 30 June 2018."

Of the total assets of the company, PPE is 57.52 per cent which remained unverified as to its quantity, said the auditor.

"Moreover, the company has never performed impairment test of its PPE which is also a non-compliance with the Bangladesh Accounting Standard (BAS)."

There are 31 offices and the auditors have visited 20 Grid Maintenance Division (GMD) offices involving inventory amounting to over Tk 1.59 billion.

In those offices, the auditors found that inventories amounting to over Tk 579.68 million were not recorded in the books of account.

"This indicated incomplete reporting in the financial statements," said the auditor's opinion.

The PGCB reported an amount of over Tk 3.23 billion as receivables from transmission/wheeling and optical fibre charges.

The amount includes receivables from DPDC, DESCO, RPC, PBS Munshiganj, PBS Gazipur, M/S Abul Khair Steel Products, PBS-1, Natore and BWDB GK Project (Bheramara, Kushtia). And there are disputed amounts with these organisations, according to the auditor's opinion.

The auditor said the company is very 'unlikely' to recover the amounts in full and has not made provisions for those amounts.

"If provisions were made for the above, the EPS and NAV for the year 2017-2018 would have adversely been affected to that extent," the auditor added.

The PGCB has reported EPS at Tk 4.73 and NAV per share at Tk 108.12 for the year ending on June 30, 2018 as against Tk 4.33 and Tk 89.79 respectively for the same period of the previous year.

The company's board of directors has recommended 17 per cent cash dividend for the year ending on June 30, 2018.

The company's share price closed at Tk 47.80 on the Dhaka Stock Exchange (DSE) on Thursday, registering a marginal loss of 0.42 per cent or Tk 0.20 over the previous day.


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