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Posts Tagged ‘Susan LIm’

Susan Lim’s BT Interview or The Importance of Numbers

In Corporate governance, Uncategorized on 21/06/2011 at 7:32 am

Susan Lim gave her side of the story to BT last week. I assume she wanted BT readers to understand her case and sympathise with her.

But the numbers she quoted (see below) made no sense, and annoyed this reader. They in no way supported her point that, This was a huge loss-making assignment. (Yahoo carried this report. My quotes are from the original BT report.)

She points to a detailed report produced by KordaMentheNeo’s Owain Stone, an expert in forensic accounting, which concludes – among other things – that the daily breakeven cost for Dr Lim’s practice, over a six-month period in 2007 during which she worked intensely on the patient, amounts to $46,000.

This compares to the $58,000 a day she billed the patient for, which included overtime pay and work done outside Singapore not factored into the calculation of the $46,000.

Her comments had this number cruncher wanting to know more because these numbers do not support her point that, This was a huge loss-making assignment.

Juz using her numbers, she made a net profit of $2.18m for these six months or 182 days: (58- 46) x 182 x 1000. Extrapolate these numbers and one gets a yearly income of $4.38m. Now $4.38m is close to the figure another surgeon (Ng Eng Hen) is alleged to have earned in the year before he entered politics. $4m is serious money for us lesser mortals.

Granted I “cheated” as, the $58,000 a day she billed the patient for, which included overtime pay and work done outside Singapore not factored into the calculation of the $46,000. True, but shouldn’t the accountants have added these overtime and overseas work into the breakeven cost so that the breakeven cost increases?*

And if they didn’t, why not? Proper accounting for costs is not rocket science, but sumething first- year students are taught in management accounting courses.

And if they did account for these, why didn’t she quote these numbers? They could have shown that her practice did lose money on the assignment.

Another question that is begging for an answer is, “Do the breakeven cost of $46,000 include any payments to you in the form of salary, director’s fees or advance payments?”. If they do, these numbers should have been disclosed by her when she bandied these numbers. These would have given an analyst a better understanding of what went into calculating the breakeven.

I’m not accusing Susan Lim or her accountants of anything shady or stupid. I’m juz trying to understand how the numbers she quoted prove that, This was a huge loss-making assignment.

And I am expected to believe her when she says her practice is technically bankrupt? Certainly not on the numbers she quoted.

Maybe the numbers are all there, but Susan Lim had airheads as her media handlers and advisers. From my experience, this is a not uncommon occurrence. They goofed, she suffered.

Whatever the case may be, the moral of the story is, “Don’t play play with numbers”. And don’t employ PR people who are uncomfortable with number. BTW I was a PR person for a short spell. And I am comfortable with numbers. And I was a lawyer.

*This was corrected at 7.40pm on 21 June 2011. “True, but shouldn’t the accountants have added these overtime and overseas work into the breakeven cost while deducting them from the billings, so that the breakeven cost increases and the billings decrease?”

 

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