(2014) Ozner Water International :
Glaucus Research announced another report commenting on Ozner Water’s announcement as “not entirely accurate,” “inconsistent,” and “not inclusive of all changing scenarios”. The short-seller kept their suggestion of Strong Sell. In relation to the allegation of material exaggeration of sales, production and profit, Ozner Water explained days ago that the purported discrepancy is primarily attributable to the timing difference in revenue recognition for accounting and tax reporting purposes.
Day: April 8, 2015
Does Auditor Explanatory Language in Unqualified Audit Reports Indicate Increased Financial Misstatement Risk? “Emphasis of matter” language predicts restatements + China Environment’s Auditor Emphasis of Matter
Related posts: (1) China Environment: Auditor Emphasis of Matter raises more questions on potential accounting tunneling risk; (2) Open Letter to SGX/MAS: Reply to CFO of SGX-Listed China Environment (CENV SP) on report “Potential Accounting Tunneling Fraud at China Environment?” – Address the accounting and governance concerns in an SGX/MAS announcement
Does Auditor Explanatory Language in Unqualified Audit Reports Indicate Increased Financial Misstatement Risk?
Czerney, Keith1 Schmidt, Jaime J.2 Thompson, Anne M.1
Accounting Review. Nov2014, Vol. 89 Issue 6, p2115-2149. 35p. 8 Charts.
Abstract:
According to auditing standards, explanatory language added at the auditor’s discretion to unqualified audit reports should not indicate increased financial misstatement risk. However, an auditor is unlikely to add language that would strain the auditor-client relationship absent concerns about the client’s financial statements. Using a sample of 30,825 financial statements issued with unqualified audit opinions during 2000-2009, we find that financial statements with audit reports containing explanatory language are significantly more likely to be subsequently restated than financial statements without such language. We find that this positive association is driven by language that references the division of responsibility for performance of the audit, adoption of new accounting principles, and previous restatements. In addition, we find that (1) ”emphasis of matter” language that discusses mergers, related-party transactions, and management’s use of estimates predicts restatements related to these matters, and that (2) the financial statement accounts noted in the explanatory language typically correspond to the accounts subsequently restated. In sum, our results suggest that present-day audit reports communicate some information about financial reporting quality.
Cloud Live Spooks Chinese Junk Bonds Amid Second Onshore Default
http://www.wsj.com/articles/chinese-defaults-head-into-the-cloud-heard-on-the-street-1428409016
Cloud Live Spooks Chinese Junk Bonds Amid Second Onshore Default
April 7, 2015
Chinese junk bonds fell after Cloud Live Technology Group Co. said it will miss payments due today as the nation braces for its second onshore corporate default. The yield on solar-cell maker Baoding Tianwei Baobian Electric Co.’s notes due 2018 climbed seven basis points to 7.49 percent after Cloud Live’s statement late Monday, according to exchange data. Fertilizer company Inner Mongolia Nailun Group Inc.’s 2018 bonds surged 50 basis points to 21.06 percent. Higher-graded securities showed little reaction. Continue reading
AsianExtractor: Unearthing Accounting Fraud in Asia 