http://www.reuters.com/article/2015/01/19/hp-autonomy-sfo-idUSL6N0UY26N20150119

UK’s Serious Fraud Office ends investigation into HP-Autonomy deal

10:03am EST

* UK’s SFO ends its investigation into deal to buy Autonomy

* SFO cedes jurisdiction of parts of case to U.S. authorities (Adds HP, former Autonomy CEO Lynch reaction)

By Paul Sandle

LONDON, Jan 19 (Reuters) – Britain’s Serious Fraud Office (SFO) has closed its investigation into the ill-fated sale of Autonomy to Hewlett-Packard Co in 2011, saying there was not enough evidence to secure a conviction of the software firm’s former executives. Autonomy was supposed to be the $11.1 billion centrepiece of a shift into software for HP, but the deal turned sour a year later when it wrote off three quarters of the company’s value.

HP alleged “some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures” to inflate the company’s apparent worth by more than $5 billion. Autonomy’s former management, including company founder Mike Lynch, has denied the allegations. Continue reading →

Posted by CHEN TianCheng, Year 4 undergrad at the School of Accountancy, Singapore Management University

What I found relevant were the ways that short-sellers could manipulate the market and make quick money out of it (in many cases, this would be the minority investors). My purpose for sharing this is to bring up the point that unlike us thinking that the perpetrators of frauds are the only bad guys, short-sellers can also do ethically questionable actions given the amount of funds they have on hand.

Posted by CHEN TianCheng, Year 4 undergrad at the School of Accountancy, Singapore Management University

Prior to reading this, I was not aware that in India, there was a different expectation towards external auditors compared to in Singapore, that the external auditors have the onus to detect fraud in their performance of the statutory audit. This is significantly different in Singapore, where our purpose is not to uncover fraud, but to ensure no material misstatements are uncorrected, that can change an intended user’s decision.

This difference is illustrated here in the amendments to the India Company’s Act in 2013.

http://www.thehindubusinessline.com/industry-and-economy/fraud-detection-is-now-responsibility-of-cas/article5455700.ece

I also found a PwC’s special report on MCX in India which unveiled 676 related parties other than the 235 that were already disclosed. This discrepancy was unveiled only after decades.

http://businesstoday.intoday.in/story/pwc-report-mcx-raises-questions-on-role-of-statutory-auditors/1/206318.html

Experts are still questioning the role of auditors in India, whether it is their responsibility to detect fraud, and they bring up valid problems that external auditors face in the performance of audit procedures. If they are required to uncover fraud, it would probably mean that they need to check every transaction and not do the usual sampling processes that is usually performed to ensure no material misstatements.

http://www.wsj.com/articles/hong-kong-regulator-alleges-misleading-research-1421616733

Hong Kong Regulator Alleges Misleading Research

SFC Pursues Actions Against Moody’s, Citron

ENDA CURRAN And RICK CAREW

Updated Jan. 18, 2015 4:34 p.m. ET

Hong Kong’s securities regulator is turning up the heat on what it considers to be misleading stock research. In recent months, the Securities and Futures Commission has pursued separate actions against U.S. ratings firm Moody’s Investors Service Inc. and a California-based short seller for releasing what it claims were misleading reports on Hong Kong-listed companies that sent their stock and bond prices tumbling.

The regulator’s actions against Moody’s and the head of Citron Research are rare instances of a developed-market regulator taking on a ratings firm or a research analyst for the content of their reports. In short selling, which is legal in Hong Kong and some other countries such as the U.S., an investor sells borrowed shares in hopes of buying them back later at a lower price, pocketing the difference. Continue reading →