Serba Dinamik - Corporate Governance Issues and the Role of Auditors in Unveiling Red Flags
Handling an audit controversy requires more than just internal efforts. Market fallout could become inevitable at some point.
At a glance
Country
Malaysia
Industry
Energy
Founded
1993
Revenue
US$ 304 million
(as of 2022)
Abstract
Serba Dinamik Holdings Berhad (SDHB), a key player in Malaysia’s oil and gas industry, faced a severe corporate governance crisis in 2021 following KPMG’s discovery of RM4 billion (US$904 million) in financial discrepancies. This case study examines the unraveling of SDHB’s financial issues, highlighting the role of auditors in identifying red flags and the challenges they faced in an environment of resistance and legal pushback. The crisis escalated as SDHB disputed audit findings, dismissed KPMG, and attempted to withhold independent review reports from regulators, ultimately leading to prolonged legal battles, regulatory scrutiny, and a steep financial decline.
The market fallout, marked by the company's delisting from Bursa Malaysia in 2024, underscores critical lessons in corporate governance, financial transparency, and auditor independence. The case provides a real-world scenario for analyzing the interplay between corporate leadership, financial oversight, and market accountability. It challenges students to explore strategic responses to governance issues and the broader implications for investor confidence and regulatory frameworks.
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