New rules require auditors to highlight issues like valuations; Acra and accountants’ body say ‘key audit matters’ section goes beyond usual pass/fail audit opinion; Enhanced auditor reporting standards to provide more transparency from 2017

New rules require auditors to highlight issues like valuations; Acra and accountants’ body say ‘key audit matters’ section goes beyond usual pass/fail audit opinion


JUL 31, 20155:50 AM


WRITEDOWNS on the valuations of investments could soon be on the cards for some Singapore-listed companies in commodities and other sectors, which are treading more carefully in the wake of new rules on audit report disclosures unveiled by the accountancy regulator on Thursday, market observers said. Continue reading


Noble plunge leads to SGX ‘caution’ call; Noble Group’s Buybacks Exceed Almost All Its Recent Acquisitions

Noble Group’s Drawbridge Down; Shorts Cross Moat — Overheard

July 30, 2015 3:46 p.m. ET

With Noble Group’s defenses down, the shorts stormed the castle.

Shares of Noble, the embattled Asian commodities trader, plunged 12% Thursday to a 6½-year low and drew a “trade with caution” warning from the Singapore stock exchange. Noble’s stock has taken a beating in the past few months, as questions have been raised over the sustainability of the company’s profits. Noble has denied accusations about how it accounts for profits, and has also pledged greater transparency. But those moves haven’t prevented investors from increasingly betting against the shares. Noble’s shares on loan, a measure of short interest, have risen above 9%, according to Markit. To fight that pressure, Noble has countered by aggressively buying back its own stock. That may have limited the damage over the past month or so. But under Singapore Stock Exchange rules, Noble can’t buy back stock in the two weeks leading up to its earnings announcement, which is scheduled for Aug 13. That no-trading “blackout” period started Thursday. It could be a long two weeks for Noble’s shares. Continue reading

SFC wins Hong Kong case against EY for audit failure in Standard Water Limited as the accounting firm finally handed over the audit papers held by its Mainland affiliate, EY Hua Ming (EYHM)

SFC wins Hong Kong case against EY, but future problems loom

PUBLISHED : Tuesday, 28 July, 2015, 12:30am

Beijing’s state secrets law will lead to further legal disputes unless procedures are clarified

The Securities and Futures Commission has won a five-year legal battle with EY as the accounting firm has finally handed over the audit papers of a mainland Chinese client to the commission. But this does not mean other accountants will automatically follow EY’s lead. Continue reading

Daewoo Shipbuilding and Marine Engineering (DSME)’s $2.6-billlion accounting fiasco; KDB, management, Deloitte share blame

Updated : 2015-07-30 17:06

Daewoo’s $2.6-bil. fiasco

KDB, management, Deloitte share blame

Daewoo Shipbuilding and Marine Engineering (DSME) Wednesday disclosed an operating loss of 3.03 trillion won or about $2.6 billion on sales of 1.67 trillion won in the second quarter. This disastrous performance is the work of three incompetent parties ― the Korea Development Bank (KDB), the shipbuilder’s previous and current management and accounting firm Deloitte Anjin. As usual, the taxpayers are the victim. The state bank should take the biggest portion of the blame. As the controlling shareholder, it either failed to detect or condoned what has gone wrong with its “subsidiary.” Continue reading

Japan’s Enron Reckoning; Newfangled tech uncovered old-fashioned fraud; Initial searches found Tanaka’s email trail to be puzzlingly short for a man with a reputation for banging out message after message; Single call led to unraveling of Toshiba accounting fraud; Toshiba fraud a deafening wake-up call for better corp governance in Japan

July 30, 2015 5:00 pm JST

Newfangled tech uncovered old-fashioned fraud

TOKYO — High-tech sleuthing helped experts recover deleted, old or otherwise buried emails that implicate former Toshiba presidents in years of systematic accounting fraud at the venerable electronics maker. Continue reading

Controlling Shareholder Entrenchment, Investor Protection, and Firm Cash Holding: Chinese Experience

Controlling Shareholder Entrenchment, Investor Protection, and Firm Cash Holding: Chinese Experience

Xiaoran Ni Tsinghua University – School of Economics & Management
February 14, 2015
Asian Finance Association (AsianFA) 2015 Conference Paper

This paper shows that agency problems result from controlling-minority shareholder conflicts have a nonlinear causal relation with firm cash holding, and this relation hinges critically on the strength of investor protection. Using a direct measure of controlling shareholder’s entrenchment behavior, our theoretical work in a two-period static model and empirical analysis using Chinese financial data during 2000-2013 shows that the relation between controlling shareholder tunneling and cash holding is significantly U-shaped, and this relation is more significant with stronger investor protection. Also, The inflation point of the U-shape is inversely propotional to the strength of investor protection, which is smaller with stronger investor protection. In general, our findings reinforce the importance of informal investor protection mechanisms in mitigating agency problems and affecting firms’ cash policies in an emerging markets with undeveloped legal systems.