Auditor unable to trace Tk76cr cash at Fortune Shoes

Auditors have found major documentation gaps over about Tk76 crore in cash withdrawn by listed Fortune Shoes Limited during the 2024-25 financial year, leaving the funds untraceable.

The audit was conducted by G Kibria & Co, Chartered Accountants, which reported that the company withdrew the funds from a regular account maintained with Islami Bank through 207 cheques.

However, the company failed to provide necessary documentation – such as the cash book, bank book, cheque counterfoils, invoices, vouchers, and delivery challans – to verify the use of the withdrawn funds. 

The absence of even the cash book made it impossible for the auditors to confirm whether the money was used for legitimate business purposes.

On Thursday (8 January), the share price of the company closed at Tk14.40 on the Dhaka stock exchange.

The audit report also highlighted Tk19.73 crore in insurance claims related to fire damage to raw materials and finished goods in 2022, which the company had included in its financial statements. 

Of this, Tk13.65 crore was claimed from Takaful Insurance Limited and Tk6.08 crore from Prime Insurance Company Limited. Nearly three years have passed, yet the claims remain unsettled. 

No correspondence or documentation regarding the likelihood of recovery was provided to the auditors, raising significant uncertainty over the realisability of the claims.

The auditors further noted that although Fortune Shoes declared and approved dividends for the 2022, 2023, and 2024 financial years, the full amounts were not distributed. Dedicated dividend accounts were opened with Prime Bank PLC, but the entire approved amounts were not transferred. 

As a result, Tk10.05 crore in dividends remained unpaid as of 30 June 2025, in violation of applicable laws and regulations.

Material discrepancies were also found between the company's accounting records and its monthly VAT returns. According to the auditors, differences included Tk143.63 crore in revenue, Tk13.86 lakh in local raw material purchases, and Tk40.21 crore in imported raw material purchases, indicating significant reporting inconsistencies.

The audit report additionally raised concerns over employee retirement benefits. Fortune Shoes does not maintain any approved provident fund or gratuity scheme. 

Instead, an employee-initiated fund is being operated without proper authority and is not subject to regular audits, which is contrary to the Financial Reporting Council (FRC) requirements.