A worker operates machinery at VEMA's assembly plant. — VNA/VNS Photo
Despite accruing significant profits of billions of đồng, Việt Nam Engine and Agricultural Machinery Corporation (VEAM) was flagged for a qualified opinion and noted for a multitude of issues by the external auditor, according to its 2024 biennial consolidated financial review.
A "qualified opinion" is an auditor's report indicating that while the financial statements are mostly accurate, there are some issues that don't fully meet accounting standards.
In the first half of 2024, VEAM recorded a net revenue of over VNĐ1.9 trillion (US$77.4 million), down 2.8 per cent year-on-year.
With profits from joint ventures increasing by 4.4 per cent and a reduction in costs, VEAM's profit after tax reached VNĐ3.2 trillion, showing a slight uptick from the same period last year.
As of June 30, the company has not assessed the potential recovery of overdue receivables amounting to nearly VNĐ46 billion (compared to over VNĐ44 billion at the beginning of the year).
The auditing firm faced challenges in obtaining sufficient evidence related to these overdue receivables and determining the necessity of creating provisions for difficult-to-recover receivables or adjusting relevant figures.
It also said that VEAM has yet to evaluate the net realisable value of stagnant inventory, valued at around VNĐ72 billion. The auditing firm was unable to perform alternative procedures to confirm the adequacy of VEA's provision for impaired inventory or assess the need for adjustments to related items.
Pending expenses totalling VNĐ466 billion, which includes items like loan interest, depreciation and the land lease for a foam factory dormant since 2015, as well as the Bắc Kạn branch of Matexim, are reflected under prepaid expenses and incomplete operational costs.
The auditing firm also drew attention to the unresolved status of the investment project for mid-range four-wheel tractor production, where essential construction costs hinge on future regulatory decisions.
Additionally, the VEAM Board of Directors approved the Relocation and Construction of a New Small Tractor Manufacturing Plant project on July 31. The project, slated from the fourth quarter of 2016 to the first quarter of 2023, is awaiting completion of extension procedures.
The auditors also noted that as of the date of the financial report, official approval for the equity settlement of VEAM's parent company has not been obtained by the relevant authorities. — VNS