Posted by Lin Liye, Year 4 undergrad at the School of Economics, Singapore Management University

In March 2014, there was a CCTV report related to the supply of toxic gelatine by certain enterprises in food production, of which one of the enterprises named was a supplier to Labixiaoxin.

With respect to this update, PWC wanted to hire an independent advisor selected by PWC to investigate the allegations. However, Labixiaoxin had already hired an “independent advisor” on their own and had already “reported their findings to the company”. When PWC pursued the matter further and wanted to see the results and findings, Labixiaoxin used the argument that they could not agree with the audit fees payable to PWC to terminate the auditor relationship as below. Continue reading →

http://timesofindia.indiatimes.com/business/india-business/SC-asks-RBI-to-probe-fresh-fraud-by-Sahara-company/articleshow/46361947.cms?

Posted by Katharine TAN Pei Shi, Year 4 undergrad at the School of Accountancy, Singapore Management University

Unable to cough up Rs 10,000 crore to secure the release of its chief Subrata Roy since March 4 last year, the troubled Sahara group on Tuesday faced fresh setbacks in the Supreme Court which ordered Roy to be taken back to jail from the conference room inside Tihar and asked RBI to probe an alleged Rs 500 crore financial fraud by group company Sahara India Financial Corporation (SIFCL).

Appearing for RBI, senior advocate Parag Tripathi said the court had on June 14 last year relaxed its earlier freeze order on alienation of bonds, securities and fixed deposits to enable the group to sell these financial instruments and raise bail bond money to get Roy and two directors out of jail. Tripathi alleged that in the garb of the SC order, the Sahara group company liquidated its securities, bonds and fixed deposits, which were secured against repayment to investors and depositors, but diverted nearly Rs 500 crore to its sister concern Sahara India. However, only a little over Rs 3 crore was paid to investors and the company maintains that there are no claimants for Rs 1,000 crore deposits, he said. Continue reading →

http://www.wsj.com/articles/watchdog-raises-red-flags-on-ginnie-mae-financial-statements-1425072817

Posted by John SOH Yong Ye, Year 4 undergrad at the School of Economics, Singapore Management University

A government watchdog Friday raised red flags about a top federal loan backer’s financial statements.

A report by the inspector general for the U.S. Department of Housing and Urban Development said that it couldn’t sign off on financial statements made by Ginnie Mae, a government agency that securitizes federally insured mortgages.

The inspector general said that Ginnie made accounting errors in its financial statements for the year ended September 30, 2014. The report also said that Ginnie didn’t provide enough information for the inspector general to evaluate Ginnie’s treatment of $6.6 billion in loan assets. Continue reading →

http://www.travolution.co.uk/articles/2015/02/24/11751/guest-post-make-fraud-detection-part-of-your-companys-dna.html

Posted by LAM Xin Hui, Year 4 undergrad at the School of Accountancy, Singapore Management University

February 24, 2015

By Roberto Da Re, chief executive of Dolphin Dynamics

Fraud can hit your bottom line, hammer your reputation, and scare off customers. But it is possible to minimise the risks. More control and more automation is the best place to start. This is because the complicated transactional nature of travel leaves it open to fraud. There are deposits, payments, cancellations, refunds, taxes, discounts and commissions. Control these touch points and the potential for fraud can be reduced.  Continue reading →

http://www.wsj.com/articles/the-sec-caves-on-china-1424967173

The SEC Caves on China: An exemption for Chinese auditors puts U.S. markets at risk.

Feb. 26, 2015 11:12 a.m. ET

U.S. stock-market regulators say they promote transparency and fair play, but this month the Securities and Exchange Commission quietly carved out a China-size exception: When Chinese companies list on U.S. markets, basic auditing rules won’t apply.

Why? Because China’s government doesn’t want them to, and Washington bent to Beijing’s pressure. The SEC has long sought access to the auditing records of Chinese companies suspected of fraud. Tens of billions of dollars in U.S. market value have disappeared in recent years as more than 170 U.S.-listed Chinese companies have faced scrutiny for embezzlement, theft, misrepresentation and other alleged abuses. Continue reading →

http://www.scmp.com/print/business/companies/article/1724450/sfc-wins-court-order-wind-china-metal-recycler-forgery

Related: HK SFC action against China Metal Recycling for accounting fraud serves as test case for HK laws involving mainland China firms

SFC wins court order to wind up China metal recycler for forgery

Thursday, 26 February, 2015, 10:17pm

Eric Ng eric.mpng@scmp.com

The Securities and Futures Commission won a landmark court order to wind up China Metal Recycling (Holdings), which said it was the mainland’s largest recycler of scrap metal but was alleged by the SFC to have grossly inflated sales and profit by forging documents and transactions. It is the first time the securities watchdog has obtained a court directive to liquidate a Hong Kong-listed firm under the Securities and Futures Ordinance to protect minority shareholders and creditors. The SFC said CMR overstated its sales by about 46 per cent, or HK$8 billion, and its gross profit by 72 per cent or HK$1 billion between 2007 and 2009.

“This is an audacious and dishonest scheme using multiple secret nominees established all around the world to deceive Hong Kong investors and creditors into believing [CMR] had a track record and a performance that it simply did not have,” said SFC executive director of enforcement Mark Steward. The SFC said CMR devised a complex scheme to inflate its sales and profit dating back to its 2009 initial public offering prospectus, using a Macau subsidiary as a “factory” for generating false documents. The scheme involved fake shipments of scrap metal between the United States and mainland China, false shipping documents and accounts, and “highly complex round robin” transactions spanning continents. The Macau unit, Central Steel Macao, had made 431 payments totalling US$2.4 billion to purported suppliers in the US and Hong Kong in 2012, the SFC said. Almost all were ultimately sent back to the Macau unit. Continue reading →

http://www.wsj.com/articles/agfeed-agrees-to-pay-18-million-to-settle-sec-accounting-fraud-case-1410815266​

Posted by Amy CHAN Wen Yi, Year 4 undergrad at the School of Accountancy, Singapore Management University

A Chinese animal-feed and hog-production company has agreed to pay $18 million to settle Securities and Exchange Commission allegations that it reported fake revenue to meet financial targets and boost its stock price, the SEC said Monday.

AgFeed Industries Inc. inflated its revenue by $239 million by creating fake invoices for the sale of feed and purported sales of hogs that didn’t actually exist, among other methods, the SEC said when it filed suit against the company in March. The moves boosted the company’s annual revenue over a 3 ½-year period by amounts ranging from 71% to 103%, according to the SEC. Continue reading →

http://www.reuters.com/article/2014/08/16/us-china-qingdao-fraud-idUSKBN0GG02420140816

Posted by YEO Wei Lin, Year 3 undergrad at the School of Accountancy, Singapore Management University

Sat Aug 16, 2014 1:52am EDT

Reporting by Fayen Wong; Editing by Michael Perry

(Reuters) – China’s third-largest terminal Qingdao Port International, which is embroiled in an alleged financing scam, has received two lawsuits from global warehousing firm Pacorini Logistics claiming a total of $58.4 million, the firm said. Continue reading →