Transmile Group Berhad (KLSE: TRANMIL, stock-code 7000) which was haunted by accounting irregularities and more than halved the fortune of billionaire Robert Kuok in the company is reported to be toying with KPMG to replace auditor Deloitte & Touche. The Transmile-Deloitte relationship was said to have blossomed many years ago, even before Transmile was listed, until the crisis in accounting cracked.

One of Transmile shareholders, Trinity Coral Sdn Bhd, which owned 16 per cent of the air cargo carrier as at July 31 and an associate of PPB Group Bhd (controlled by tycoon Robert Kuok) is in favor of KPMG instead of the old-guard Deloitte. Deloitte was the audit firm which discovered accounting irregularities in Transmile’s recent accounts.

KPMG is currently the auditor for some of Kuok’s investments, including its Hong Kong-listed Keck Seng Investments and Shangri-La Hotels (Malaysia) Bhd, as well as offering due diligence and corporate tax advisory services to PPB Group – reported Business Times.

FinanceTwitter think the timing is right for the replacement as the confidence in Transmile was greatly eroded by the irregularities. Deloitte might be the firm which discovered the problem but it’s still not justifiable to continue its service as the problem was tracked back to 2005 and the quantum was huge. This is not a small issue such as a student who didn’t do his homework but a catastrophe which turned shareholders’ investment into red overnight. Even a student who didn’t do his assigned homework would probably be punished, so Deloitte should consider itself lucky to be able to continue its business without a single cent poorer.

Regardless whether the accounting irregularities was discovered because of a sudden stringent audit processes by Deloitte or because the worms were too huge to be kept inside the can, the fact remains that Deloitte has failed in its duty to protect the shareholders.

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August 23rd, 2007 by financetwitter

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