Make fraud detection part of your company’s DNA

Posted by LAM Xin Hui, Year 4 undergrad at the School of Accountancy, Singapore Management University

February 24, 2015

By Roberto Da Re, chief executive of Dolphin Dynamics

Fraud can hit your bottom line, hammer your reputation, and scare off customers. But it is possible to minimise the risks. More control and more automation is the best place to start. This is because the complicated transactional nature of travel leaves it open to fraud. There are deposits, payments, cancellations, refunds, taxes, discounts and commissions. Control these touch points and the potential for fraud can be reduced.  Continue reading


Noble says Iceberg author a former staff; group posts US$240m Q4 loss, missing by far the average estimate of US$470.6 million by 13 analysts; Noble had written off US$438m for the year, including a US$200m charge for Yancoal Australia, the valuation for which had been criticised by Iceberg

Noble says Iceberg author a former staff; group posts US$240m Q4 loss


27 Feb5:50 AM


NOBLE Group has fingered a former employee as the person behind Iceberg Research, as it reported on Thursday its first quarterly loss in three years due to a heavy impairment charge on an associate. Continue reading

The SEC Caves on China: An exemption for Chinese auditors puts U.S. markets at risk.

The SEC Caves on China: An exemption for Chinese auditors puts U.S. markets at risk.

Feb. 26, 2015 11:12 a.m. ET

U.S. stock-market regulators say they promote transparency and fair play, but this month the Securities and Exchange Commission quietly carved out a China-size exception: When Chinese companies list on U.S. markets, basic auditing rules won’t apply.

Why? Because China’s government doesn’t want them to, and Washington bent to Beijing’s pressure. The SEC has long sought access to the auditing records of Chinese companies suspected of fraud. Tens of billions of dollars in U.S. market value have disappeared in recent years as more than 170 U.S.-listed Chinese companies have faced scrutiny for embezzlement, theft, misrepresentation and other alleged abuses. Continue reading

HK SFC wins court order to wind up China metal recycler for accounting forgery

RelatedHK SFC action against China Metal Recycling for accounting fraud serves as test case for HK laws involving mainland China firms

SFC wins court order to wind up China metal recycler for forgery

Thursday, 26 February, 2015, 10:17pm

Eric Ng

The Securities and Futures Commission won a landmark court order to wind up China Metal Recycling (Holdings), which said it was the mainland’s largest recycler of scrap metal but was alleged by the SFC to have grossly inflated sales and profit by forging documents and transactions. It is the first time the securities watchdog has obtained a court directive to liquidate a Hong Kong-listed firm under the Securities and Futures Ordinance to protect minority shareholders and creditors. The SFC said CMR overstated its sales by about 46 per cent, or HK$8 billion, and its gross profit by 72 per cent or HK$1 billion between 2007 and 2009.

“This is an audacious and dishonest scheme using multiple secret nominees established all around the world to deceive Hong Kong investors and creditors into believing [CMR] had a track record and a performance that it simply did not have,” said SFC executive director of enforcement Mark Steward. The SFC said CMR devised a complex scheme to inflate its sales and profit dating back to its 2009 initial public offering prospectus, using a Macau subsidiary as a “factory” for generating false documents. The scheme involved fake shipments of scrap metal between the United States and mainland China, false shipping documents and accounts, and “highly complex round robin” transactions spanning continents. The Macau unit, Central Steel Macao, had made 431 payments totalling US$2.4 billion to purported suppliers in the US and Hong Kong in 2012, the SFC said. Almost all were ultimately sent back to the Macau unit. Continue reading

[Flashback] AgFeed Agrees to Pay $18 Million to Settle SEC Accounting Fraud Case​

Posted by Amy CHAN Wen Yi, Year 4 undergrad at the School of Accountancy, Singapore Management University

A Chinese animal-feed and hog-production company has agreed to pay $18 million to settle Securities and Exchange Commission allegations that it reported fake revenue to meet financial targets and boost its stock price, the SEC said Monday.

AgFeed Industries Inc. inflated its revenue by $239 million by creating fake invoices for the sale of feed and purported sales of hogs that didn’t actually exist, among other methods, the SEC said when it filed suit against the company in March. The moves boosted the company’s annual revenue over a 3 ½-year period by amounts ranging from 71% to 103%, according to the SEC. Continue reading

[Flashback] Muddy Waters alleges fraud at Superb Summit

Muddy Waters alleges reported revenues came from non-existent unit

Hong Kong shares of Superb Summit International Group were suspended at 11.19am yesterday, after US short-seller Muddy Waters released a report alleging fraud at the loss-making company.

Continue reading

Do investors overvalue firms with bloated balance sheets? Noble overstated commodity values by at least $3.8 bln – Iceberg Research

A helpful critical thinking framework relevant for Noble Group, as well as many of the S-chips that include China Environment, the company that Terence, Roy, Shan Rui, Ronald, John have wrote and discussed about.

Journal of Accounting and Economics Volume 38, December 2004, Pages 297–331

Do investors overvalue firms with bloated balance sheets? 

David HirshleiferKewei HouSiew Hong TeohYinglei Zhang


When cumulative net operating income (accounting value-added) outstrips cumulative free cash flow (cash value-added), subsequent earnings growth is weak. If investors with limited attention focus on accounting profitability, and neglect information about cash profitability, then net operating assets, the cumulative difference between operating income and free cash flow, measures the extent to which reporting outcomes provoke over-optimism. During the 1964–2002 sample period, net operating assets scaled by total assets is a strong negative predictor of long-run stock returns. Predictability is robust with respect to an extensive set of controls and testing methods. Continue reading

[Flashback] Qingdao Port says unit sued by Pacorini for $58.4 million amid fraud probe

Posted by YEO Wei Lin, Year 3 undergrad at the School of Accountancy, Singapore Management University

Sat Aug 16, 2014 1:52am EDT

Reporting by Fayen Wong; Editing by Michael Perry

(Reuters) – China’s third-largest terminal Qingdao Port International, which is embroiled in an alleged financing scam, has received two lawsuits from global warehousing firm Pacorini Logistics claiming a total of $58.4 million, the firm said. Continue reading

[Flashback] Transmile – the fall of a national cargo carrier

Posted by Valerie NG, Year 3 undergrad at the School of Accountancy, Singapore Management University

Posted on 2 September 2014 – 05:38am

Written by Eva Yeong

PETALING JAYA: It is ironic that on the same day that Khazanah Nasional Bhd announced its latest recovery plan for troubled national carrier Malaysian Airline System Bhd (MAS) that, once a designated national cargo carrier, Transmile Group Bhd held its third AGM as a private company. Continue reading

SEC Probes Companies’ Treatment of Whistleblowers; Agency Officials Concerned About Corporate Backlash Against Whistleblowers

SEC Probes Companies’ Treatment of Whistleblowers

Agency Officials Concerned About Corporate Backlash Against Whistleblowers

The Securities and Exchange Commisssion has made a push to bring more whistleblower cases since the 2010 passage of the Dodd-Frank financial-reform bill, which created the agency’s whistleblower program. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES


Feb. 25, 2015 9:00 p.m. ET

The Securities and Exchange Commission is probing whether companies are muzzling corporate whistleblowers.

In recent weeks the agency has sent letters to a number of companies asking for years of nondisclosure agreements, employment contracts and other documents, according to people familiar with the matter and an agency letter viewed by The Wall Street Journal. The inquiries come as SEC officials have expressed concern about a possible corporate backlash against whistleblowers. Continue reading