Shirble Department Store shapes up after audit finds loopholes
Shirble announces 64pc profit plunge, revises controls after loopholes found
Shirble Department Store has enhanced internal controls after its auditor found management loopholes in its sourcing and property acquiring process, which led to a delay in announcing its financial results.
The Shenzhen-based retailer yesterday announced results for the past financial year to December, with net profit plunging 64 per cent to 71.6 million yuan (HK$89.1 million) because of increased labour and rental costs, and one-off losses.
Turnover grew 12 per cent to 1.43 billion yuan.
The company suspended stock trading on March 29 and postponed issuing its annual results three times between March and June, as its auditor Moore Stephens needed more time to investigate a number of transactions.
"Following its investigation and the review of the Moore Stephens review report, the [company's] audit committee is of the view the group had various internal control weaknesses," said Yang Xiangbo, the chairman and acting chief executive of the company.
The accounting firm said the company's internal control was inadequate when it bought and decorated two properties in Meizhou and Haifeng, in Guangdong province.
It also criticised the company for lacking management and legal experience when acquiring a distribution centre and a commercial property in Shenzhen.
Moore Stephens also said there was insufficient inspection and control over the prepayment procedure when dealing with suppliers.
Yang said the company had taken internal control improvement measures suggested by the auditor. It also planed to hire a new chief executive by the end of the month and appoint an additional independent non-executive director following the resumption of share trading.