SINGAPORE - Cordlife’s independent auditor KPMG will not be seeking reappointment after issuing a disclaimer of opinion on the financial statements for FY2023.
On April 25, Cordlife said KPMG had given written notice to retire as the company’s external auditor, though its disclaimer of opinion was not raised as the reason for KPMG’s decision to do so.
The cord blood bank added that it “is not aware of any other circumstances connected with KPMG’s decision not to seek reappointment as auditor of the company at the financial year 2023 annual general meeting, that should be brought to the attention of shareholders”.
KPMG issues disclaimer of opinion
Earlier, KPMG had submitted a disclaimer of opinion in its independent auditor’s report dated April 24, stating that it had not been able to obtain “sufficient appropriate audit evidence” to provide a basis for an audit opinion on several areas.
These areas included the company’s compliance with laws and regulations, given Cordlife’s ongoing investigations by the Ministry of Health (MOH) and the Commercial Affairs Department (CAD).
KPMG also addressed uncertainties in providing an audit opinion on the subject of Cordlife’s refunds and claims, after the company said it would waive all future annual fees and initiate a refund for clients affected by its recent case of damaged cord blood units.
The auditor said it was unable to obtain sufficient audit evidence over the number of affected customers with confirmed damaged cord blood arising from temperature excursions as at Dec 31, 2023 – and therefore the “quantification and significance” on any adjustments to be recorded in Cordlife’s financial statements as a result.
KPMG further highlighted that “there are no alternative audit procedures that can be performed” in applying the going concern basis of preparation for Cordlife’s financial statements.
This is because investigations by MOH and CAD remain ongoing, while Cordlife’s business in Singapore remains suspended.
“The business operations in Singapore are a significant component of the group operationally, and the financial results are material to the overall group,” it added.
As at end-June 2023, total revenue of Cordlife’s business operations in the Republic represented 45 per cent of the group’s financial year 2023 results, while total assets of the Singapore business comprised 51 per cent.
The Singapore business’ operations were also the largest contributor to the group’s profit before tax for financial year 2023, highlighted KPMG.
Lastly, the auditor said it was unable to obtain sufficient audit evidence regarding subsidiaries that require financial support from Cordlife.
Discrepancies in audited and unaudited accounts
The company separately on April 25 also flagged material differences between its audited, and unaudited condensed interim, financial statements for financial year 2023.
Among other financial metrics, the group’s earnings per share (EPS) for the full year was restated to 1.38 cents, 4.8 per cent lower than the earlier-posted financial year 2023 EPS of 1.45 cents.
Revenue was $55.7 million based on audited statements versus $55.9 million in the unaudited results, while the company’s profit stood at $3.5 million instead of $3.7 million.
Cordlife said the discrepancies were due to the “recognition of contract liabilities... during the preparation of the audited financial statements”.
These liabilities were related to future storage obligations for all active clients whose cord blood units are stored in the company’s affected Tank A, which refers to one of the storage tanks at Cordlife exposed to temperatures above acceptable limits at different periods from November 2020.
Cordlife shares closed at 12.5 cents on April 25, down 0.1 cent or 0.79 per cent. THE BUSINESS TIMES
Correction note: The opening line of this article has been amended to clarify that KPMG’s retirement from its role as Cordlife’s external auditor, and the issuance of its disclaimer of opinion, is separate from Cordlife’s statement of discrepancies between its audited and unaudited statements.
