SIECO uncovers administrative, financial violations of former executive management

Saudi Industrial Export Co. (SIECO) said that the external auditor of the company refrained from expressing an opinion on the annual financial results for 2020, it said in a bourse statement.

Following that, the audit committee had difficulty in wrapping up the notes of the external auditor and monitoring administrative and financial violations of the previous executive management.

The company’s board of directors affirmed its compliance with the transparency and the governance by disclosing the status to the investors and working with the authorities to resolve the administrative and financial violations conducted by the previous executive team to protect the rights of the company and its shareholders.

SIECO reported a net loss after Zakat and tax of SAR 12.8 million for 2020, compared to SAR 26 million in 2019, according to data compiled by Argaam.

The company listed the reasons for the external auditor’s disclaimer report, as follows:

- The Group has accounts with a bank outside Saudi Arabia, whose book value as of Dec. 31, 2020, is SAR 1.66 million. The audit firm was not provided with approval of the account balances of this bank, and as a result was unable to obtain sufficient and appropriate audit evidence about these balances and about the possibility of unrecorded or disclosed assets and liabilities. In addition, the firm was unable to obtain audit evidence, either sufficient or appropriate, through alternative audit procedures, and accordingly, it was unable to determine whether there were any necessary adjustments to the value of cash and cash equivalents and liabilities as of Dec. 31, 2020.

- The Group did not calculate expected credit losses (ECL) in accordance with International Financial Reporting Standard (IFRS9); therefore, the firm was unable to determine whether there were any necessary adjustments to the value of trade receivables as of Dec. 31, 2020.

- The management did not provide the audit firm with the stock movement during 2020; therefore, they were unable to verify the correctness of the cost of inventory items on the basis of weighted average cost.

- The audit firm was unable to obtain sufficient and appropriate audit evidence to verify the correctness of the balance of the defined employee benefit obligations for 2020.

- The audit firm was unable to obtain sufficient and appropriate audit evidence to verify the value of the revenues for 2020, which amounted to SAR 39.5 million.

- The management did not evaluate the Group's relationship of its contracts with clients as principal or agent in accordance with IFRS15. Hence the auditors were unable to verify the appropriateness of presenting the items of revenue and cost of revenue to the group for 2020.

- The audit firm was unable to obtain sufficient and appropriate audit evidence to verify the value of the general and administrative expenses for 2020, which amounted to SAR 9.9 million.