The Bangladesh Securities and Exchange Commission (BSEC) has directed the Dhaka Stock Exchange (DSE) to investigate alleged irregularities in the 2024 audited financial statements of listed company Monno Agro & General Machinery PLC.

The allegations include a lack of supporting documents for purchases and significant cash-based transactions. The BSEC’s Corporate Reporting Department recently sent a letter to the DSE’s Chief Regulatory Officer, asking it to submit a comprehensive investigation report with specific information, supporting documents and recommendations within 30 working days.

According to the auditor’s observations, documents supporting various purchases including requisitions, work orders, purchase orders, quotations, delivery challans, goods-receiving receipts, money receipts and payment applications were unavailable. As a result, the auditor could not verify the justification of the related expenses reported in the financial statements.

The regulator has also asked the DSE to examine the company’s extensive use of cash for payments and collections. The investigation will look into the source and use of the funds and whether the transactions can be properly traced.

The BSEC said Monno Agro’s explanation did not adequately address the auditor’s observations. Therefore, the commission wants the DSE to verify the authenticity of the transactions, the effectiveness of the company’s internal controls and the justification of expenses reported in its financial statements.

The DSE has also been instructed to determine whether any transactions with related parties were conducted outside normal business terms or market prices, and whether there were errors or inconsistencies in the financial statements. It will also assess whether the auditor’s reporting decisions were appropriate under the circumstances.

Earlier, on February 10 this year, the DSE’s Corporate Governance and Financial Reporting Committee sent observations to the BSEC regarding Monno Agro’s financial statements. Based on those observations, the commission has now formally ordered the investigation.

The probe is expected to provide greater clarity on the alleged irregularities, the validity of the company’s transactions and the effectiveness of its internal control system.