http://www.wsj.com/articles/india-analyst-is-jailed-after-negative-report-1418359350

India Analyst Is Jailed After Negative Report: Rare Arrest Seen Causing a Chill on Market Coverage

GEETA ANAND

Dec. 11, 2014 11:42 p.m. ET

GURGAON, India—Complaints filed by one of India’s biggest property and financial-services groups after a negative report about it more than two years ago have landed the report’s co-author, accountant Nitin Mangal, in jail.

The group, Indiabulls , says the report, which questioned its corporate governance and accounting, was full of lies and was used for extortion purposes. Mr. Mangal’s lawyer says the report was based on public information, was accurate and wasn’t used to try to scare money out of anyone. Continue reading →

http://ww2.cfo.com/gaap-ifrs/2014/12/revenue-recognition-changes-spur-sec-fraud-probes/

Revenue Recognition Changes Could Spur SEC Fraud Probes

The new FASB revenue recognition standard means increased focus from auditors and likely unwanted attention from the SEC.

Nicolas Morgan and Shauna Watson, Contributors

December 12, 2014 | CFO.com | US

Throughout 2014, the Securities and Exchange Commission has signaled an increased focus on financial reporting fraud in general and revenue recognition in particular. In October, SEC Chair Mary Jo White said the SEC has seen a “significant jump” of more than 20% in enforcement actions in the area, and SEC Enforcement Director Andrew Ceresney called the area the “next frontier” for enforcement. Continue reading →

http://www.wsj.com/articles/meet-the-secs-brainy-new-crime-fighters-1418601581

Meet the SEC’s Brainy New Crime Fighters: ‘Quants’ Are Agency’s Latest Weapon Against Financial Misdeeds

Lori Walsh, left, chief of the Securities and Exchange Commission Enforcement Division’s Center for Risk and Quantitative Analysis, with Howard Kaplan, a data analyst in the SEC’s enforcement division, in Washington. T.J. KIRKPATRICK FOR THE WALL STREET JOURNAL

SCOTT PATTERSON

Updated Dec. 14, 2014 10:39 p.m. ET

Long outgunned by Wall Street’s legions of Ph.D.s, the Securities and Exchange Commission is arming itself with mathematicians and computer programmers of its own to catch bad market actors.

The question is whether this is an arms race government regulators can hope to win.

The SEC is mustering its mathematical firepower in its Center for Risk and Quantitative Analytics, which was created last year soon after Mary Jo White took charge of the agency to help it get better at catching Wall Street misconduct. The enforcement unit, led by 14-year SEC veteran Lori Walsh, is housed deep within the warrens of the SEC’s Washington headquarters, and staffed by about 10 employees trained in fields such as mathematical finance, economics, accounting and computer programming. Continue reading →

http://www.wsj.com/articles/sec-big-4-firms-make-progress-in-china-audit-dispute-1418685152

http://www.bloomberg.com/news/print/2014-12-15/sec-cites-progress-in-talks-to-resolve-china-auditing-standoff.html

http://www.scmp.com/print/business/china-business/article/1587376/hunt-fraud-mainland-firms-made-harder-chinas-secrecy-laws

SEC, Big 4 Firms Make Progress in China Audit Dispute

Both Sides Say ‘Significant Time’ Needed to Discuss Potential Settlement

MICHAEL RAPOPORT

Dec. 15, 2014 6:12 p.m. ET

U.S. regulators and the Chinese affiliates of the Big Four accounting firms have made “substantial progress” toward settling their dispute over access to the firms’ audit documents, the two sides said Monday.

But Securities and Exchange Commission enforcement officials and the Chinese affiliates of the Big Four firms—PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG—say that while their progress toward a settlement has “increased significantly,” they still need “significant time and care” to discuss the potential pact, according to an order in the SEC’s administrative proceeding against the firms. Continue reading →

http://english.caixin.com/2014-12-15/100763376.html

12.15.2014 18:51

Former SOE Head Handed Death Sentence for Fraud Scheme

Court finds former general manager of Guangzhou-based company guilty of scam involving loss of state assets worth 284 million yuan

By staff reporter Wang Jing (Beijing) –

A former executive of a state-owned enterprise in southeastern Guangzhou has been sentenced to death recently for bribery and draining hundreds of millions of yuan from state assets.

Zhang Xinhua, former general manager of Guangzhou-based Baiyun Nonggongshang United Co. Ltd, was found guilty by the city’s intermediate People’s Court of embezzling 72 million yuan worth of state-owned assets and taking another 100 million yuan in bribes. The court also convicted him of causing a loss of 284 million yuan in state-owned assets. Continue reading →

Discussion Questions:

(1) Chinese ecommerce giant Alibaba uses the VIE structure. Given the “success” of Alibaba’s IPO, are VIEs necessarily bad i.e. are companies with VIE structure more prone to accounting fraud? What kind of companies tend to use the VIE structure? Generate a list of companies with VIE structure in different exchanges in US and Asia and do some analysis…

(2) How can the management abuse their application of “shared power” in consolidating VIE? What is the accounting policy take on discretionary changes in the exercise of this power?

http://www.complianceweek.com/blogs/accounting-auditing-update/sec-cautions-companies-on-consolidation-analyses#.VJQKQ0ABA

SEC Cautions Companies on Consolidation Analyses

Tammy Whitehouse | December 17, 2014

The Securities and Exchange Commission is taking a closer look at who consolidates a variable interest entity, noticing some differences in how companies apply existing guidance and offering views to help make reporting more consistent. Continue reading →

Discussion Questions:

(1) Are companies audited by Baker Tilly HK more prone to accounting fraud? What are the firm characteristics e.g. state-owned companies vs privately-owned enterprises? Are they from certain industries? Are they structured as offshore holding companies? Generate the list of Baker Tilly audit clients and do some analysis..

(2) Do different audit firms have different policy in their audit of related-party transactions of Asian/ Chinese companies?

(3) Why has US SEC struggled for years to obtain information for dozens of accounting fraud investigations at China-based companies?

http://www.bloomberg.com/news/print/2014-12-17/sec-fines-baker-tilly-hong-kong-for-missing-red-flags-in-china.html

SEC Fines Baker Tilly Hong Kong for Missing Red Flags in China

By Alan Katz – Dec 17, 2014

The U.S. Securities and Exchange Commission sanctioned audit firm Baker Tilly Hong Kong and suspended two of its employees for signing off on the financial statements of a China-based company accused of fraud. Continue reading →