Recently, it was reported that the Liquidator for Serba Dinamik Bhd and its three subsidiaries, all of which are currently in liquidation, have filed a civil suit against KPMG PLT, seeking at least RM1.56 billion (US$391 million) in damages plus interest for alleged negligence in the audits of the group between financial years 2016 and 2019.
According to the statement of claim filed in the Shah Alam High Court dated Aug 2, 2026, the four companies in liquidation, acting through liquidator Victor Saw Seng Kee from PricewaterhouseCoopers Advisory Services Sdn Bhd, argued that the group took significant financial actions based on the clean audit opinions issued by KPMG during that period.
In the statement of claim, the Liquidator alleged that KPMG failed to identify massive revenue overstatements that ultimately led to the group’s collapse.
The plaintiff asserts that the group's reported financial statements for FY2016 to FY2019 by KPMG were significantly misstated, failing to provide a “true and fair view” of its affairs, with reported revenues overstated by between 62% and 87% each year.
The financial statements were materially misstated because KPMG failed to properly plan and conduct adequate audit procedures to obtain sufficient appropriate audit evidence.
Upon investigations by the liquidator, it was alleged that the overstatements were primarily driven by fictitious sales to seven domestic customers via SDSB and 13 international customers via SDIL.
The Liquidator claimed in the statement of claim that KPMG failed to exercise professional scepticism despite unusual revenue growth, particularly within SDIL, and negligently allowed company staff to interfere with the external audit confirmation process.
The Liquidator also claimed that if KPMG had performed adequate audit procedures, it would have uncovered the misstatements much earlier instead of only raising serious concerns during the FY2020 audit.
The Liquidator claimed that reliance on these audits by KPMG resulted in Serba Dinamik paying out:
- RM1.795 billion in dividends that could not have been paid if the true financial state were known.
- RM851 million in finance costs, including interest and profit payments, arising from the group’s borrowings and financing.
- RM161.5 million in income taxes paid on purported profits that were actually the result of overstated revenue.
Question for the Audit Oversight Board (AOB) and Securities Commission (SC).
If KPMG had been negligent in their audit as alleged by the Liquidator for Serba Dinamik, how did their work escape scrutiny from both entities?
AOB reportedly said they did not penalize KPMG, maintaining that auditors must be allowed to discharge their duties and report material issues without fear of retaliation.
With this suit by the Liquidator for Serba Dinamik, AOB and SC should shoulder the blame and should be held equally responsible for the destruction in the value of Serba Dinamik that improvished thousands of shareholders and creditors alike.
It is because of this `hands off’ attitude, letting the auditor to discharge their duties without fear of retaliation that resulted in KPMG continued in its audit of the company.
Probably the current Chairman of SC will disclaim any responsibility for this case as he was appointed only in June 2024.
But not his 2 earlier predecessors, Tan Sri Dato' Seri Ranjit Ajit Singh who served as Chairman from 2016 until October 2018 and Datuk Syed Zaid Albar who took over starting November 1, 2018, serving through 2019.
The only action that SC initiated in this case was only against the company, Serba Dinamik and four of its senior executives, including its CEO and MD Datuk Mohd Abdul Karim Abdullah where in May 2022, SC and the Attorney General's Chambers imposed a total of RM16 million in compound fines on Serba Dinamik Holdings Bhd and four of its top executives for submitting a false financial statement to Bursa Malaysia regarding an RM6.014 billion revenue figure.
Both SC and AOB did not publicly penalise or take regulatory enforcement action on KPMG PLT over its audit of Serba Dinamik Holdings Bhd.
The Liquidator, from PricewaterhouseCoopers Advisory Services Sdn Bhd would not have filed the suit against the auditor if they did not have concrete evidence and proper legal advice that KPMG did indeed committed negligence.
The ball is now in the court of SC and AOB.
The Liquidator, short of saying SC and AOB also failed in their duties and responsibilities in examining KPMG, is openly and legally claiming that KPMG had indeed failed and were negligent in their work performed on Serba Dinamik.
Is SC and AOB also adopting the stance that since the Liquidator has filed the suit, they will let the Liquidator discharge their duties and wait for the process to be exhausted before they will initiate actions against KPMG?
In the case against another audit firm in 2025, AOB suspended Chengco PLT (formerly known as Cheng & Co) for two years starting June 12, 2025.
In a statement, AOB said the firm and its partners concerned were found having multiple instances of non-compliance with international auditing standards, discovered in two inspections by the AOB in 2016 and 2018 respectively.
The audit deficiencies that AOB reportedly found was Cheng & Co’s failure to obtain sufficient appropriate audit evidence in key areas like revenue, cost of sales, goodwill, and bank borrowings, rRecurring deficiencies regarding property development costs and fixed deposits and inadequate engagement quality control reviews on high-risk areas and significant judgments.
In the case of Serba Dinamik, the company was wound up in Jan 2023 and subsequently delisted from Bursa Malaysia in June 2024.
SC and AOB kept mum and until today failed to take action against the auditor, KPMG.
Why the quick and putative actions against Cheng & Co while KPMG was not investigated and actions taken against them?
Thanks to the Liquidator from PricewaterhouseCoopers Advisory Services Sdn Bhd, corporate world in Malaysia now knows that SC and AOB have differing treatments for the so called Big audit firms and those smaller firms.
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