Germany’s Siemens said it was investigating a media report that it boosted sales figures of its healthcare equipment in China by creating fake contracts

http://www.reuters.com/article/2015/03/02/siemens-china-healthcare-idUSL5N0W42IN20150302

Siemens investigates report of fictitious Chinese contracts

Mon, Mar 2 2015

FRANKFURT/SHANGHAI, March 2 (Reuters) – Germany’s Siemens said it was investigating a media report that it boosted sales figures of its healthcare equipment in China by creating fake contracts. Chinese business daily Yicai cited Chinese distributors as saying that Siemens’ healthcare division had been creating contracts with them that were not backed up by real sales. The distributors would pay a 10 percent down payment, allowing Siemens to book the contracts. Siemens would then return the payments to them by other means, Yicai said. Continue reading

Hedge Funds Cry Foul Over Indonesian Debt Workout of PT Bakrie Telecom; they can’t vote on the workout arrangements because their defaulted notes were issued by an offshore special-purpose vehicle

http://www.bloomberg.com/news/articles/2015-03-02/hedge-funds-cry-foul-over-indonesian-debt-workout-asean-credit

Hedge Funds Cry Foul Over Indonesian Debt Workout

byChristopher Langner

March 3, 2015

(Bloomberg) — Five hedge funds are testing Indonesia’s legal protections for foreign investors after a local court barred them from PT Bakrie Telecom’s debt restructuring talks.

The funds and one other bondholder are asking a New York court to quash a ruling by a Jakarta district judge that they can’t vote on the workout arrangements because their defaulted notes were issued by an offshore special-purpose vehicle. The investors, who own 28 percent of the $380 million May 2015 dollar-denominated securities, said in the suit they will recover less than 20 cents on the dollar under the plan. Continue reading

China state-owned firms’ overseas assets are not audited

http://www.reuters.com/article/2015/03/03/us-china-audit-idUSKBN0LZ09N20150303

Posted by Joel CHUA Yong Sheng, Year 3 undergrad at the School of Business, Singapore Management University

China state-owned firms’ overseas assets are not audited: Xinhua

Mon, Mar 2 2015

SHANGHAI, Mar 3 (Reuters) – China does not audit the 4 trillion yuan ($637.42 billion) of assets its state-owned enterprises (SOE) hold overseas, Xinhua news agency reported, highlighting difficulties the government faces when expanding its anti-corruption drive to SOEs. Continue reading

Building trust as a tool to create an anti-fraud environment?

Building trust as a tool to create an anti-fraud environment?

Posted by PHOON Pei Jing, Year 3 undergrad at the School of Economics, Singapore Management University

http://www.huffingtonpost.com/cynthia-hanson/how-can-businesses-build-_b_6537670.html

http://www.businessinsider.in/Corporate-Frauds-In-India-On-The-Rise/articleshow/45899708.cms

http://www.forbes.com/2010/06/10/corporate-fraud-executive-compensation-personal-finance-risk-list-2-10-kaplan.html

http://www.reuters.com/article/2012/07/30/us-financial-sarbox-idUSBRE86Q1BY20120730

Given the rising number of fraud cases around Asia, with India seeing a rise of over 45% in corporate frauds in the last 2 years, one of the more important questions today in the business world has been about how businesses can build trust. After all, trust is key to any businesses’ performance as well as competitiveness, and building trust may even help lay the foundation to a successful anti-fraud business relationship. Continue reading

Detecting the rapidly rising number of small scale fraud cases

Detecting the rapidly rising number of small scale fraud cases

Posted by PHOON Pei Jing, Year 3 undergrad at the School of Economics, Singapore Management University

With the enforcement of the Sarbanes-Oxley Act, standards at big companies have generally improved over the past decade or so, with more effective internal controls over their financial reporting. In addition, “Accounting Quality Model”, a computer program that number-crunches reams of companies’ financial statements looking for outliers and other red flags to facilitate fraud detection have also been extensively revised. Stringent enforcement, together with streamlined process of fraud detection has helped to create an anti-fraud environment. Continue reading

Where Should SEC Start A Fraud Crack Down? Maybe Look At Fake Restatements

http://www.forbes.com/sites/francinemckenna/2013/06/18/where-should-sec-start-a-fraud-crack-down-maybe-look-at-fake-restatements/

Posted by Mildred LIANG Bei Yan, Year 4 undergrad at the School of Accountancy, Singapore Management University

Where Should SEC Start A Fraud Crack Down? Maybe Look At Fake Restatements

It’s so good to hear that the Securities and Exchange Commission plans to refocus its enforcement efforts on accounting fraud. It would be even better for investors if the regulator used all the information already available – no need to resort to fancy computer algorithms – to prosecute accounting frauds and the executives, directors and third-party aiders and abettors like lawyers and auditors. Let’s stop waiting to be roused to action by private lawsuits. Continue reading

Investing in U.S.-Listed Chinese Companies Becomes Even Riskier

http://www.theepochtimes.com/n3/1267518-investing-in-u-s-listed-chinese-companies-becomes-even-riskier/

Posted by Jelvin Tan Xiang Rong, Year 4 undergrad at the School of Accountancy, Singapore Management University

By , Epoch Times | March 2, 2015

Five years ago, Sino-Forest Corp. was one of the largest commercial forestry companies in China and a stock-market darling, attracting capital from legendary hedge fund investors such as John Paulson.

Sino-Forest owned and operated tree plantations throughout China, and manufactured and sold wood products to downstream customers. The company floated shares onto the Toronto Stock Exchange. Its stock soared as investors rushed to participate in a supposedly booming Chinese economy. At one time, Sino-Forest’s market capitalization eclipsed $6 billion.

Then it all came crashing down. Continue reading

Cooking the Books: The Case of Malaysian Listed Companies

http://ijbssnet.com/journals/Vol_4_No_13_October_2013/20.pdf

Posted by Jeremy TAN Leming, Year 4 undergrad at the School of Accountancy, Singapore Management University

International Journal of Business and Social Science Vol. 4 No. 13; October 2013 179

Cooking the Books: The Case of Malaysian Listed Companies

Abstract

Cooking the books refers to fraudulent accounting activities undertaken by a business to falsify its financial statements. Thus, the objectives of this study are to investigate what the cooking-the-books activities carried out by businesses consist of, how they conduct them, and what the impact is on the business and its shareholders. The case study sample companies are two Malaysian companies that had received various awards from reputable third-party organizations. On the other hand, the activities undertaken in both companies have caused them to be labelled as Malaysian mini Enrons. We employ a qualitative research methodology as most prior research employs a quantitative methodology to investigate the determinant factors in businesses’ cooking-the-book activities. The result of the study shows that the managers have used their positions, prior experience, and regulatory loopholes in their activities. Furthermore, the financial report restatement and higher reported earnings are the early warning signals of their activities. As a result of this, the Malaysian Securities Commission has revised the corporate governance code, and among others incorporated the Audit Oversight Board, known in the US as the Public Company Accounting Oversight Board.

Embattled ASX-listed education company Vocation crashes to $273m loss, audit problems flagged

http://www.smh.com.au/national/education/vocation-crashes-to-273m-loss-audit-problems-flagged-20150302-13s95f.html?skin=text-only

Earlier postVocation chief Mark Hutchinson ‘should have been axed earlier’ after a damning audit review into the quality and practices of two of its businesses and the aggressive revenue recognition practices; How hedge funds predicted Vocation’s collapse

Vocation crashes to $273m loss, audit problems flagged

Date: March 02 2015
Simon Evans

Embattled education company Vocation crashed to a $273 million loss for the first half of 2014-15 because of heavy write-downs and fewer enrolments due to its battered reputation over the quality of some of its courses. The company has made extra provisions for the outcomes of regulatory audits which are pending in another business, outside those which were in the spotlight late in 2014 and which have already caused serious damage to the company. Vocation announced on Monday it had suffered a $273 million bottom-line loss for the six months ended December 31, 2014, compared with a loss of $4 million for the same time last year. Continue reading

IBM Corp was sued by a shareholder that said it committed securities fraud by failing to write down a money-losing semiconductor unit before agreeing to pay another company $1.5 billion to take that unit off its hands

http://www.reuters.com/article/2015/03/02/us-ibm-lawsuit-fraud-idUSKBN0LY2JC20150302

IBM shareholder sues company, alleging it overvalued chip unit

5:38pm EST

By Jonathan Stempel

NEW YORK (Reuters) – IBM Corp was sued on Monday by a shareholder that said it committed securities fraud by failing to write down a money-losing semiconductor unit before agreeing to pay another company $1.5 billion to take that unit off its hands. The lawsuit filed in Manhattan federal court arose from IBM’s announcement last Oct. 20 that it would sell the unit to GlobalFoundries Inc, and take a related $4.7 billion pre-tax charge. IBM also announced third-quarter results that day. Its share price fell 9 percent over the next two trading days, wiping out more than $18 billion of market value. Continue reading