Related post: Does Auditor Explanatory Language in Unqualified Audit Reports Indicate Increased Financial Misstatement Risk? “Emphasis of matter” language predicts restatements

Qualified opinions due to business complexity

By Yen Ne Foo

6 July 2015

The Edge Malaysia (Weekly)

A number of Bursa Malaysia-listed companies with small market capitalisation, including those with prominent shareholders like self-made tycoon Tan Sri Vincent Tan and businessman Datuk Tey Por Yee, saw their FY2014 financial accounts slapped with a “qualified” opinion by external auditors. Are financial shenanigans on the rise or have auditors turned more cautious following an explosion of mega financial fraud in recent years? Former stock market darling Transmile Group Bhd, whose investors include billionaire Tan Sri Robert Kuok, comes to mind. Continue reading →

http://www.outlookindia.com/article/a-252cr-guarantee-to-a-firm-worth-less-than-25-cr/294787

A 252-Cr Guarantee To A Firm Worth Less Than 2.5 Cr…

Meetu Jain

13 July 2015

Outlook (India)

The PAC on the 4G auction in 2010 is to take up the final CAG report. Will Reliance Jio get mired in the alleged collusion scandal in pan-India licences? When contacted, Reliance Jio says, “We have acquired all our spectrum at market prices through open and transparent bidding processes, the conditions for which were the same for all bidders.” But clearly, the last hasn’t been heard of this watered-down report. It remains to be seen what line the PAC, headed by Congress MP K.V. Thomas, takes. Will the BJP government take its so-called cold war with Mukesh Ambani to its logical conclusion? The second point raised by CAG made it to the final report. This was how the rules of the game were changed three years after the auction. As other telcos watched, voice services were suddenly allowed to be bundled on the same frequencies for those holding broadband wireless access (BWA) spectrum. In short, from being an internet service provider, Reliance Jio now became a full service provider. Moreover, this spectrum was given at 2001 rates in 2010. At least at this stage it seems DoT cannot be charged with collusion or dereliction. In response to a PIL, solicitor-general Ranjit Kumar had given an opinion for DoT: “No occasion can therefore be said to have arisen for DoT to inquire into the transaction between IBSPL and RIL unless there was any complaint/material with DoT to indicate their collusion….” When contacted, Axis Bank issued a bald statement “that all credit decisions were taken after due appraisal keeping in mind all aspects, including that of security”. According to sources, the Rs 252-crore guarantee was backed up against the existing limit of another client with AAA ratings—that’s why the change of name was done manually.

It raised red flags as to how Infotel—a company with a net worth of Rs 2.4 crore—could get a bank guarantee of Rs 252 crore without giving a security deposit. What nobody has yet been able to explain is why and how the Rs 252-crore bank guarantee cheque issued by Axis Bank, Mumbai, was tampered with. And who deleted the computer-printed name on the cheque in favour of a handwritten one. Continue reading →

http://www.mydigitalfc.com/news/ibankers-put-notice-listing-fake-sme-ipos-055

iBankers put on notice for listing fake SME IPOs

Sebi: Many firms got listed for tax evasion, money laundering

Ashwin J Punnen

2 July 2015

Financial Chronicle

As part of its crackdown on price manipulation on the SME trading platforms of the stock exchanges, market regulator Sebi has asked merchant bankers operating in this space to improve due diligence while bringing companies for listing. Sebi has found that many companies that exist only on paper just for the purpose of tax evasion and money laundering were brought to the market. The regulator now wants iBankers to ensure that the due diligence is done properly. Sources said Sebi was looking at the role of merchant bankers in the SME IPOs. The market regulator is also likely to review the regulation governing the SME segment, where companies can raise funds from HNIs and institutional investors with minimum disclosure requirements.

Earlier this week, Sebi had barred four companies — Eco Friendly Food Processing Park, Esteem Bio Organic Food Processing, Channel Nine Entertainment and HPC Biosciences — along with 235 other entities from the market for making Rs 614 crore illegal gains through suspected money laundering and tax evasion. Most of these companies have no real business, yet they managed to raise funds and got listed on the SME platform. Several companies with turnovers of less than Rs 5 crore and market capitalisations of over Rs 500 crore have seen sharp rise in stock prices without any change in fundamentals. Continue reading →