EcoBuilt gets qualified audit opinion with going‑concern red flag on trade payables and liquidity

PETALING JAYA (July 1): Accounting auditors PKF PLT has issued a qualified opinion on EcoBuilt Holdings Bhd’s audited financial statements for the financial period ended Feb 28, 2026.

The opinion states that, except for the possible effects of the matter described in the Basis for Qualified Opinion section, the financial statements give a true and fair view of the group and company’s financial position, performance and cash flows in accordance with MFRS, IFRS Accounting Standards and the Companies Act 2016.

The basis for qualified opinion centres on long‑outstanding trade payables and reconciliation issues:

1) Included in the group’s trade payables are long‑outstanding balances of RM3.46 million (as at Feb 28, 2026) and RM26.09 million (as at Aug 31, 2024) for which the auditors could not obtain external confirmations and could not perform satisfactory alternative procedures.

2) The auditors also identified discrepancies between certain creditors’ statements and EcoBuilt’s recorded balances, indicating a possible understatement of RM7.26 million and overstatement of RM5.52 million in trade payables as at Feb 28, 2026, and possible understatement of RM8.45 million and overstatement of RM2.26 million as at Aug 31, 2024.

3) Management could not satisfactorily reconcile or explain these differences, leading the auditors to state they were unable to determine whether any adjustments might be necessary to trade payables or whether there were consequential effects on comparability of current and prior‑period figures.

Because of these unresolved issues, PKF reports that it has not obtained all the information and explanations required, which is also highlighted under “Report on Other Legal and Regulatory Requirements”.

Going‑concern uncertainty

Separately, the audit report discloses a material uncertainty related to going concern:

*Note 2(b) shows the group incurred a net loss of RM7.62 million in the period ended February 28, 2026.
*As at that date, the group’s current liabilities exceeded current assets by RM2.08 million, indicating negative working capital.

The auditors state that these conditions, together with other matters set out in Note 2(b), “indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern”, although their opinion is not modified in respect of this matter.

EcoBuilt’s response and governance context

In its Bursa announcement yesterday (June 30), EcoBuilt says it acknowledges the matters highlighted and has undertaken, and will continue to undertake, measures to strengthen internal controls, accounting processes, monitoring procedures and reconciliation of key balances, with the aim of resolving the basis for qualification within 12 months.

Planned steps include enhanced reconciliation procedures, supporting documentation and periodic reviews of significant accounting estimates and judgements.

The 2026 Corporate Governance Report shows that:

a) The board is chaired by Datuk Noordin Sulaiman, an independent non‑executive director; the CEO role is held by Fong Tuck Yong, with clear separation of roles under a published Board Charter.

b) The board currently comprises six directors, five of whom are independent non‑executive directors, meeting MCCG expectations on board independence.

c) The Audit Committee is chaired by Ho Pui Hold, and its terms of reference include policies for assessing external auditor suitability, independence and cooling‑off requirements for former audit partners.

d) The group’s internal audit function is outsourced to Brandford Consulting Services Sdn Bhd, led by Marcus See, a certified internal auditor, with risk‑management and internal‑control disclosures set out in the annual report’s Statement on Risk Management and Internal Control.

The company also disclosed and resolved a prior delay in issuing its annual report for the period ended Feb 28, 2026, confirming that the annual report and corporate governance report were released to Bursa on June 30, 2026 within the extension framework under Paragraph 9.23 of the MMLR.

What this means for investors and stakeholders

From an investor and governance perspective:

i) A qualified opinion tied to trade payables and incomplete audit evidence signals weaknesses in financial reporting, supplier reconciliations and internal controls that the board and Audit Committee will need to address quickly.

ii) The going‑concern warning underscores that EcoBuilt is operating with losses and negative working capital, and that its ability to continue as a going concern depends on successful execution of plans not yet fully tested.

iii) Governance structures (independent board majority, separated chair/CEO, active Audit Committee and outsourced internal audit) are formally in place, but their effectiveness in resolving the audit issues will be a key test over the next 12 months.

Investors and creditors should review Note 2(b), the full audit report and the risk‑management disclosures in the 2026 annual report, and consider seeking independent advice when assessing EcoBuilt’s financial position and governance trajectory.

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