An auditor flagged Serba Dinamik's books — the company sued, then collapsed

Serba Dinamik Holdings was a Malaysian oil-and-gas engineering and services company, listed on Bursa Malaysia and at one point among the larger names on the exchange. In May 2021 its auditor, KPMG, raised red flags about the accounts, identifying irregularities that reporting at the time put at around RM4 billion (about US$900 million). The company's response was to dispute the findings rather than restate: it commissioned its own review and then filed a civil suit against KPMG.

The market did not wait for the courts. Serba Dinamik's share price collapsed as the dispute dragged on, and Bursa Malaysia suspended trading in its shares. KPMG resigned as auditor. The regulator moved next: on 28 December 2021 the Securities Commission Malaysia charged Serba Dinamik and several of its directors and officers with submitting a false statement to Bursa Malaysia Securities, an offence under section 369(a)(B) of the Capital Markets and Services Act 2007.

The charge centred on a single number: the revenue figure of RM6.014 billion in the company's quarterly report for the year ended 31 December 2020, which the SC said was false. Those found guilty of making a false or misleading statement to the exchange face up to ten years in prison and a fine of at least RM3 million.

The company never recovered. In January 2023 creditors obtained an order to wind up Serba Dinamik and three subsidiaries. It is now a textbook governance case: when an auditor asks a hard question about the accounts, the answer that saves the company is to investigate and restate — not to sue the auditor and insist the numbers are right.