Ex-official said TPG partner might ‘smack’ his head into wall, lawsuit alleges
Friday, 03 April, 2015, 9:48pm
Reuters in New York
TPG Capital has been sued by its former head of public affairs, who accused the private equity giant of ignoring his warnings that the firm may have violated securities regulations and defrauded investors out of millions of dollars as a result. Continue reading
Related posts: (1) China Taifeng Beddings (873 HK): Typical Misleading “Value Stock” with “Low” PE and P/B Ratios – Delay in Publication of 2014 Annual Results Due to Audit Failure in Ascertaining Fair Value of Financial Guarantee Contracts on Borrowings of Subsidiary and Impairment of the Recoverable Amounts of the Group’s Assets (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
Loss attributable to equity shareholders of the Company for the year increased to RMB1,183.4 million in 2014, as compared with RMB247.8 million in 2013. The loss included the one-off and predominately non-cash loss arising from the loss on disposal of a subsidiary, reduction of deferred tax assets and impairment losses on interest in an associate, property, plant and equipment and prepayments and other receivables in the total amount of RMB372.7 million.
EXTRACT OF INDEPENDENT AUDITOR’S REPORT
The independent auditor of the Company will issue a disclaimer of opinion on the consolidated financial statements of the Group. The below section set out an extract of independent auditor’s report regarding the consolidated financial statements of the Group for the year ended 31 December 2014:
Basis for disclaimer of opinion
Limitation of scope in respect of certain consolidated statement of financial position items in prior year
The consolidated financial statements of the Group for the year ended 31 December 2013 were audited by another auditor whose report dated 31 March 2014 expressed a disclaimer of opinion in respect of the matters as described below. The predecessor auditor was unable to obtain sufficient audit evidence to ascertain the following matters: (a) the actual originating source or the payees and the nature of the bank receipts of RMB471,567,000 into the Group’s bank account during the year ended 31 December 2013 in relation to settlement of trade receivable balances due from several customers of Shanxi HunYuan Ruifeng Coal Co., Ltd. (“Ruifeng”) and the accuracy and recoverability of the outstanding trade receivable balances of RMB264,029,000 due from these customers as at 31 December 2013; (b) validity of the leasing income of RMB137,500,000 from certain tenants of Ruifeng for the year ended 31 December 2013 and the related outstanding trade receivable balance of RMB68,750,000 as at 31 December 2013; (c) the actual originating source or the payees or the nature of the bank receipts of RMB132,270,000 and RMB463,819,000 during the year ended 31 December 2013 and the period from 1 January 2014 to 31 March 2014 respectively in relation to settlement of trade receivable balances due from several customers of the Group and the accuracy and recoverability of the outstanding trade receivable balances of RMB752,933,000 due from these customers as at 31 December 2013 (the “Trade Receivables”); (d) the recoverability of an outstanding balance of RMB622,327,000 due from non-controlling shareholders (the “Amount Due from NCI”) as at 31 December 2013; and (e) the nature and recoverability of prepayments of RMB161,460,000 as at 31 December 2013 which was purported to be prepayments to certain suppliers for purchase of goods (the “Prepayments”).
In relation to above matters (a) and (b), as described in Note 32 to the consolidated financial statements, the Company disposed of its entire equity interest in Ruifeng on 29 December 2014 and recognised a loss of RMB162,585,000 (the “Loss of Ruifeng Disposal”). In relation to above matter (c), the Trade Receivable were settled during the year ended 31 December 2014. In relation to above matter (d), during the year and subsequent to the year ended 31 December 2014, non-controlling shareholders have made settlements amounting to RMB285,226,000. In relation to above matter (e), the Prepayments of RMB135,171,000 were utilised during the year ended 31 December 2014. A provision for impairment of the remaining Prepayments of RMB26,289,000 was made during the year (the “Loss of Prepayments”). Because of the unavailability of reliable financial information, we were unable to obtain sufficient appropriate audit evidence and were unable to carry out alternative audit procedures to satisfy ourselves about the balances as of 31 December 2013 mentioned in matter (a) to (e) above. Any adjustments to these balances as of 31 December 2013 would have a consequential effect on the Loss of Ruifeng Disposal, Loss of Prepayments, if any, for the years ended 31 December 2014, and the related elements making up the consolidated statement of changes in equity, the consolidated statement of cash flows and the related disclosures in the financial statements.
Disclaimer of opinion
Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion as to whether the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2014 and of the Group’s loss and cash flows for the year then ended in accordance with International Financial Reporting Standards and as to whether the consolidated financial statements have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.
Emphasis of matter
Without qualifying our opinion, we draw attention to Note 1(c) to the consolidated financial statements which indicates that the Group incurred a consolidated net loss of RMB1,292,313,000 during the year ended 31 December 2014 and, as of that date, the Group had net current liabilities of RMB5,278,281,000. These conditions, along with other matters as set forth in Note 1(c) to the consolidated financial statements, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.
Other matter
The consolidated financial statements of the Group for the year ended 31 December 2013 were audited by another auditor who expressed a disclaimer of opinion as described above, on those statements on 31 March 2014.
Macquarie to Pay $15 Million in Puda Coal Case
By Aruna Viswanatha
28 March 2015
Dow Jones Institutional News
WASHINGTON–A unit of Macquarie Group Ltd. will pay $15 million to resolve charges by the Securities and Exchange Commission that it underwrote a public offering for a China-based company even though it had information that contradicted statements in the offering materials.
The case is the SEC’s first against an underwriter in its long-running crackdown on alleged accounting fraud by Chinese companies, many of whom entered the U.S. capital markets through backdoor mergers. Continue reading
26 March 15
(3398) China Ting: China Ting Group Holdings confirmed that its loss before the tax for the year ended 31 December 2014 will increase from previously estimated HK$193 m to HK$246.9 m due to the following additional factors: (1) An impairment amount of HK$83.5 m is charged on the re-classification of its investment in Zhejiang Haoran Property Company; (2) A pro vision for bad and doubtful debt for HK$17.7 m regarding two entrusted loans of RMB160 m; (3) Increase in the estimated amount of operating profit for the last two months of 2014
20 January 15
CBRC issued draft rules restricting entrusted loans in a bid to curb excessive margin finance. The draft rules said banks shall not bear credit risks if the loan defaults, and lenders shall not issue entrusted loans if the fund is raised for specific uses by the authorities or raised from bank lending. Banks shall not issue entrusted loans using funds raised through debts, raised from other companies or individuals, or other sources that cannot be identified. Entrusted loans is a form of inter-company loan where bank intermediates one company’s lending to another company’s borrowing and collect a fee in the process. Entrusted loans have been used as a margin trading channel that may bring risks to banks as in the past when there was default in lending, it was usually the banks that bore the risks, said market insiders. The draft rules are open to public comment until 16 Feb for sugg estions on amendments
http://english.caixin.com/2015-04-03/100797361.html
04.03.2015 12:26
Glitch in Rongsheng Rescue Sheds Light on Shady Investor; Capital market veteran Wang Ping had sights set on struggling shipbuilder, but has been detained on fraud charges
By staff reporter Yu Ning and Hong Kong correspondent Wang Duan
(Beijing) – The detention by police of a capital market veteran has interrupted the restructuring plans of China’s largest private shipbuilder and shed light on the tricks used by an investor who seems to have always profited from distressed companies. In early March, debt-ridden shipbuilder Rongsheng Heavy Industries Group Holdings cancelled a planned 3 billion yuan warrant issuance to the private equity firm Kingwin Victory Investment Ltd. Continue reading
Stock manipulation: Twentyfirst Century Management Services
2 April 2015
Moneylife
The stock price of Twentyfirst Century Management Services is up 926%. The stock averages just about 75 trades a day, with an average daily turnover of only Rs6 lakh
Twentyfirst Century Management Services (TCMS) is apparently engaged in trading and investment in Indian capital markets. In 1998, its registration as a merchant banker was revoked for not exercising due diligence. In 2008, TCMS was suspended from trading due to non-compliance with the listing agreement. TCMS cites poor market conditions for its poor financial performance in the past few years. Because of low retail participation, TCMS withdrew the broking services offered by its subsidiary Twentyfirst Century Shares and Securities and surrendered the trading membership of the NSE. It reported marginal revenues and a net loss in past few years. But, suddenly, over the past few quarters, its fortunes changed. For four quarters ended December 2014, it generated revenues of Rs19.35 crore while net profit amounted to Rs14.87 crore. The stock price is up 926% to Rs39 (on 20 March 2015) from Rs3.80 on 19 March 2014. The stock averages just about 75 trades a day, with an average daily turnover of only Rs6 lakh. Not suspicious enough for the regulator, despite the stock’s vertical trajectory?
Chinese sewage treatment firm Sound Global’s credit ratings cut on weak governance
Thursday, 02 April, 2015, 10:01pm
Eric Ng eric.mpng@scmp.com
Ratings agencies have downgraded mainland sewage treatment firm Sound Global, citing governance deficiencies and internal controls concerns.
This comes two days after the Beijing-based firm said it had “potential audit issues” and would set up an independent review committee that might engage forensic accountants to look into them, despite denying recent allegations from research firm Emerson Analytics that it had faked and inflated revenues in the past few years. Continue reading
China’s leading over-the-counter exchange cracks down on illegal trading
Thursday, 02 April, 2015, 9:30pm
Reuters in Shanghai
Beijing’s New Third Board to investigate ‘ultra-high’ price quote on fears of overheating
The mainland’s leading over-the-counter (OTC) equity exchange is cracking down on illegal trading, with concerns growing that the market, which is aimed at small, high-growth firms and private equity investors, is overheating. Continue reading
Related posts: (1) Related posts: Qinfa (866 HK): Belated Audit Qualification on Accounting Tunneling Fraud (Auditor KPMG) (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
(873) China Taifeng Beddings Holdings Limited: China Taifeng Beddings Holdings Limited delayed announcing its annual results to on or after 21 April 2015.
DELAY IN PUBLICATION OF THE 2014 ANNUAL RESULTS ANNOUNCEMENT The Board wishes to inform the Shareholders the reasons for the delay include that the Company needs more time to ascertain (a) the fair value of the financial guarantee contracts given to banks on certain borrowings of its subsidiary, Shandong Taifeng Textile Co., Ltd. (“Shandong Taifeng”) given to independent third parties; (b) the fair value assessments of the estimation of the recoverable amounts of the Group’s assets which may be impaired as a results of the latest financial position of the Company which will not be available by 31 March 2015; and (c) auditor of the Company has indicated that more time is required to ascertain the cash flow position of the Company and carry out additional work in order to finalise the audit of the consolidated financial statements of the Group for the year ended 31 December 2014 as a result of the latest situation of the Company including the liquidity position of the Company as disclosed in the Company’s announcement dated 12 December and 15 December 2014 respectively. As a result, the publication of the 2014 Annual Results will be delayed, which delay constitutes non-compliance with Rule 13.49(1) of the Listing Rules. The Board and the management of the Company are doing their utmost to assist and cooperate with the Auditors so that the 2014 Annual Results can be available as soon as practicable.
NON-PUBLICATION OF MANAGEMENT ACCOUNTS Rule 13.49(3) of the Listing Rules provides that where an issuer is unable to issue its preliminary results, it must announce its results based on the financial results which have yet to be agreed with the auditor (so far as the information is available). The Board has decided, after due and careful consideration, that it would not be appropriate for the Company to publish the unaudited management accounts of the Group for the year ended 31 December 2014 (the “2014 Unaudited Management Accounts”) at this time as it is expected that there may be significant adjustment on the 2014 Unaudited Management Accounts and hence the 2014 Unaudited Management Accounts do not truly and fairly reflect the financial performance and position of the Group. The Board is therefore of the view that the publication of the 2014 Unaudited Management Accounts at this time would be misleading and confusing to the Shareholders and potential Investors.
http://onlinelibrary.wiley.com.libproxy.smu.edu.sg/doi/10.1111/1911-3846.12063/epdf
The Ties that Bind: The Decision to Co-Offend in Fraud†
Clinton Free1 and Pamela R. Murphy2
Contemporary Accounting Research
Volume 32, Issue 1, pages 18–54, March 2015
It is frequently observed that fraud has a greater economic impact on society than any other category of crime. Arguing that both research and practitioner frameworks in auditing and forensic accounting have tended to adopt an individualizing perspective predicated primarily on solo offending, this article adopts an inductive approach to consider why individuals co-offend in fraud. It reports the results of a set of interviews with 37 individuals convicted of a range of frauds including financial statement fraud, insider trading, credit card fraud, money laundering, and asset misappropriation. In each instance, the fraud was perpetrated by a group of two or more co-offenders. Based on inductive, exploratory case coding, we find that reasons for co-offending vary according to the type of bond that exists between co-offenders. Two dimensions of fraudulent co-offending are identified—the primary beneficiary of the fraud and the nature of group attachment—to derive three distinct archetypes of bonds between co-offenders: (1) individual-serving functional bonds, (2) organization-serving functional bonds, and (3) affective bonds. Key elements of each archetype as well as their impact on the decision to co-offend are examined. Our findings suggest that the social nature of fraud is not merely an incidental feature of the crime but is instead a potential key to understanding its etiology and some of its distinctive features. They also support the need for diagnostic tools to move beyond individualistic analyses of fraud toward a broader, group-sensitive assessment of fraud risk.
AsianExtractor: Unearthing Accounting Fraud in Asia 