Why do auditors disclaim?
Aug 19, 2015, 8:46 AM
Last week Tianhe Chemicals (Tianhe), a Chinese company listed in Hong Kong,announced that its auditor, Deloitte, was planning to disclaim an opinion on its financial statements. Tianhe was the target of an activist short seller campaign by Anonymous Analytics last September and a damaging analysis by theAssociated Press in November. Also last week Sihuan Pharmaceuticals (Sihuan) published its annual report for 2014 including a disclaimer opinion on its financial statements by auditor PwC. PwC used seven pages to explain why it was unable to express an opinion on the financial statements. Both stocks remainsuspended.
Disclaimer opinions are rare, so two in one week is notable. These opinions are rare because they are useless to companies and investors, so companies generally will not accept them. Regulators and exchanges are unlikely to accept a disclaimer opinion, which explains why these stocks are suspended and are likely to remain so. Continue reading
MSCI Removes Hanergy From Indexes; Move allows funds to dispose of millions of dollars they have locked up in Hanergy shares
MSCI is the latest of four major index compilers to remove Hanergy. PHOTO: REUTERS
WAYNE MA And JACKY WONG
Aug. 27, 2015 7:16 a.m. ET
HONG KONG—Stock-index compiler MSCI Inc. ejected a troubled Hong Kong solar-power company from its indexes, enabling some of the world’s biggest investment managers to dispose of hundreds of millions of dollars they have locked up in the firm’s shares. Continue reading
Governance in group entities still a potential weak spot
Parent boards must be aware of the financial and reputational damage a problem at a subsidiary can cause and take proactive steps.
COMPANIES still have a long way to go to improve corporate governance standards at their subsidiaries, according to governance experts.
Some large multinational corporations have recognised that the governance of group entities or subsidiaries can be a significant problem and have started to take action to improve their internal processes and procedures to address the issues. Continue reading