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Archive for the ‘Accounting’ Category

Raffles too was queried about his finances

In Accounting on 31/08/2015 at 4:51 am

When I read the latest attacks on the WP’s management of AHPETC, I couldn’t help remembering the attacks on Raffles by other East India Company officials that in one instance led to his impeachment. He was cleared of all impropriety in all the cases.

But when he retired, he was not only not granted a pension (he had asked for £500 a year), but was sent a bill for £20,000 (worth £2m today) for allegedly over-claiming expenses during his administrations (principally relating to the British occupation of Java).

He died two months after receiving the bill and was not able to defend himself.

His estate amounted to around £10,000, which was paid to the Company to cover his outstanding debt. His widow was left destitute.

Historians take the view that the bill was a mean-spirited attempt by his employer to “fix” him. He was a difficult (somes a rogue) employee and neither Java nor S’pore made money for the Company despite his promises to the contrary. Java was a huge drain on the East India Company but the occupation of Java had the backing of the then Governor-General in India, Lord Minto.

Raffles was more interested in extending British influence in the region, while the East India Company was interested in profits to pay dividends to its shareholders. It had soldiers, sailors and territory, but these were means to the end of making money for shareholders.

 

Profiteering? Dodgy accounts? Forensic audit needed

In Accounting, Uncategorized on 30/08/2015 at 5:38 am

So there’s another round of “he said, she said” about AHPETC’s managing agent. T’ll not comment but remind readers yet again of the underlying very technical and very dry issue. As it’s the weekend, you might want to skip the bolded bit and read to the end. There’s a bit of “She said, he said” asfer this pix.

 

https://fbcdn-sphotos-h-a.akamaihd.net/hphotos-ak-xfp1/v/t1.0-9/11888065_973540056029404_4782647463966756683_n.jpg?oh=646ce592278df46ec48bb2eb1a135c54&oe=566D1760&__gda__=1449500905_c26ff7b9ef1a86509f1436afec4096a6

Recently, representatives from nine opposition parties and the ruling PAP were represented at a three-hour forum organised by the National University of Singapore Society.

“I think in the case of AHPETC, I think what we’ve been hearing are fairly lengthy – I don’t want to say excuses, that doesn’t sound very nice – explanations which I also don’t fully understand. If you were to ask about money then I would say in the case of the AGO audit, all the monies we’ve been talking about has been accounted for, and no money is lost. But in the case of AHPETC, I’m not too sure,”

“I wish that more answers had been forthcoming from AHPETC. Then I think we would have wasted much less time on the issue and I think the population would be much the wiser.”

Have to agree with her.

To be fair, I’ll report what WP’s Mr Gerald Giam said. He pointed out that AHPETC Chairman Sylvia Lim, as well as the elected MPs who are town councillors, “all spoke, all explained various aspects of the report” during a two-day debate in Parliament. He said that this was in addition to “numerous other press statements”, “open letters to residents” and door-to-door explanations.

“I think we have done a lot of explaining already. Just because the PAP does not want to accept our explanations does not mean we haven’t explained,” said Mr Giam. “We have explained every point that has been brought up which demands an explanation and we have spared no effort in that. And with the coming election, I’m sure this issue will be raised up by the PAP and we will respond if we need to.”

Note WP has avoided stating categorically that no public funds have been lost, and no damage suffered. It can’t because AGO has said the accounts are not fit for purpse.

Yet WP has yet to commission a forensic audit, reconstruction of accounts that will tell all. This despite saying that it accepts that the AGO is professional and independent. So it saying AGO is wrong that its accounts are not fit for purpose?

Sadly as DPM Teo has said, only a PAP victory in Aljunied will uncover the truth. Or to be more accurate, a reality that is closer to the absolute truth. Remember the PAP is always out to “fix” the Oppo.

Let the voters In Aljunied and the areas where the WP is challenging the PAP decide. I’ve already decided (somewhere here, near the bottom) what I’m going to do. And voters might want to be reminded that AHPETC does things directly (like Bishan/ TP GRC. It no longer has a managing agent.

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AIM’s sotong trap

In Accounting, Political governance on 27/08/2015 at 4:36 am

 This piece is my reaction to

— what TOC reported MP Ravi as saying on the running of a town council if he wind Hong Kah’; and

— a letter to TRE from a reader.

Mr Philemon said that residents can be assured that he would be able to run a town council if he were to be elected as he is supported by the party machinery of SPP, which had run Potong Pasir for twenty over years.

“We have twenty over years of experience with Mr Chiam leading the town council in Potong Pasir. And when he left, he left with a surplus. And there were lifts upgraded, I think about 29 lifts that were upgraded, without residents co-paying for it. So that is the kind of assurance the residents can have, when they elect someone from SPP.

Not so easy Ravi. I hope that the appropriate people in SPP read an article in TRE on how AIM fixed the WP in Aljunied. To double confirm, I append the piece in full below and I sent this post to Ravi.

Last December, I asked if AHPETC had a 21st century IT systema world-class town council town council management software package? https://atans1.wordpress.com/2014/12/16/does-ahpetc-have-a-21st-century-it-system/

It turned out that according to the Auditor-General, AHPETC didn’t even an accounting system that was fit for purpose.https://atans1.wordpress.com/2015/08/18/auntie-good-accounting-is-a-national-issue-toc-bans-avatar-again/

Here’s a piece from TRE that has a plausible explanation for part of the WP’s accouting woes: that the WP was fixed. The writer makes certain assumptions like AIM uses Oracle or that the WP used Excel to store files, but ignore these very technical issues.

At heart waz he saying is that the WP or (rather I suspect) its Managing Agent walked into a trap laid by the PAP: “When the export [of data from the AIM system] is done, you will need to import the data to the new system. And you can only do it after the new system is developed. Most likely the new system will be a subset of the old system.

Therefore with the removal of the system from AHPETC, all this information is gone. They will need to manually extract the information from the exported files. Definitely no easy task.”

This explains why the AHPETC had problems submitting data to MDA, And why Auntie and Pritam took so long to verify the arrears issue.

Now this begs the question: Why did the WP not foresee the problem? Or did it think, minor IT issue? (No, I don’t ask why did AIM fix the voters’ choice, it’s in the DNA of the the PAP: fixing the Oppo and all voters.)

And is it now too pi seh to admit it got screwed?

But it still doesn’t explain why its Managing Agent didn’t keep proper records of the transactions that the Managing Agent undertook when it started operations or why the WP didn’t monitor its Managing Agent. Remember it had three hot shot lawyers, and JJ (Masters in finance). OK it didn’t have a trained accountant at a senior level.

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What you should know about the AHPETC-AIM saga

 With the elections coming, I decided to pen this article about the whole AHPETC saga. So far the articles that have been written have always been about the accounting lapses and what not. But none of them were written from an IT perspective. (Maybe no more SG IT professionals since all of them are replaced by FT, including me)

This is what we know so far.

The town council system that was used previously by the old Aljunied is a S$24 million software solution and it was sold to AIM for S$140,000.

I wasn’t involved in the project nor am I a member of WP. But anybody who has done Application Development projects with the government will know this is a huge project and it will probably involve hundreds of developers and testers, a couple of Project Managers and more Business Analysts. The size of the project tells me that they are using Oracle database (its license can easily reach $1million at least). The type of servers it is running on should be very high end, always turn on and has to be constantly kept cool (Air con is always on. Redundant air cons must be on standby in case the main one failed). This should be at least a 16 months project. I will not be surprised if it is 24 months.

However this is not the main issue. The main issue is the information from the database. And there are lots of it.

For example, these are the scenarios that I can think of.

Who has paid S&CC fees for last month? Who hasn’t? If you haven’t paid, is this your first time? Any reminders send? If so when? If this isn’t the first time, then how many times haven’t paid? If this isn’t the first time, then what are the months that have missed payments?

What type of flat? Based on flat type, penalty fees can be calculated.

Whether you are a PR or a citizen? Because the rates may be calculated differently.

If you have moved to a new flat within the GRC and you have missed the payments, what is the new address? How to ensure that the bill will be send to the new address and not the old?

These are just the tip of the iceberg. For a S$24 million project, there will be hundreds of scenarios more.

So if AHPETC was given 1 month to migrate the data, it will be an impossible task. Because to migrate, you need a new system for the migration to work. You need to migrate from the old to new system.

If there is no new system, then you have to export the data out. Given the time constraint, most likely to Excel files. And it will not be to 1 file. There will be hundreds/thousand of Excel file because of the way relational databases are designed. With Excel, it is very difficult to sort, filter and analyse the huge amount of data.

However that is only half the story.

When the export is done, you will need to import the data to the new system. And you can only do it after the new system is developed. Most likely the new system will be a subset of the old system.

Therefore with the removal of the system from AHPETC, all this information is gone. They will need to manually extract the information from the exported files. Definitely no easy task.

In short, I hope everyone will know the significance of what AIM has done.

Yours Sincerely,

Underemployed

Auntie, good accounting is a national issue/ TOC bans avatar again

In Accounting, Financial competency, Political governance on 18/08/2015 at 4:43 am

People are interested in national issues, not just town council matters, Sylvia Lim says (TOC). Well the need for a town council to have an accounting system that is fit for purpose is also a national issue. OK I exaggerate. It’s an issue at least in areas where the WP is contesting, is a fairer statement.

Auntie Lim*, Gilbert Goh**, TOC (As SPH and MediaCorp are to the PAP, so TOC** is to the WP) and TRE are trying to equate the lapses at PA and other government entities and departments identified by the Auditor-General with that of the the lapses at AHPETC identified by the Auditor-General.

The big difference is that the while the Auditor-General  says nasty things about the way the govt bodies like the PA does things, he doesn’t say that they don’t have an accounting system that is not fit for purpose. He is able to pick out lapses in the PA and other govt bodies because they have proper accounting systems. The accounting systems allow the lapses to be noticed.

But he says that the AHPETC accounting system sucks so badly that no proper records are kept.

The Auditor-General pointed out, inter alia, that AHPTEC did not “a system to monitor arrears of conservancy and service charges accurately and hence there is no assurance that arrears are properly managed”.and “No proper system to ensure … proper accounts and records were kept as required by the Town Councils Act.” (Related post https://atans1.wordpress.com/2015/02/10/conflicts-of-interest-what-conflicts/

Because proper records are not kept, no-one knows if there are irregularities.  There may be none but there may be some or many: who knows? And what if there are major irregularities?

The way things are going, only a PAP win in Aljunied will ensure that the truth comes out on whether anything is wrong. WP is dragging its feet on setting the system right. It is moving to the Bishan/ Toa Payoh model of directly managing the cleaning etc, which will allow it to say it has “moved on” without resolving the issue of irregular accounts.

Someone posted this analysis on Facebook

Having read the full report, the responses by APHTEC and AGO and PWC’s responses I would say the following.

1. That management and supervision for the first two years were sorely lacking , to the extent that corporate governance is needed , FMSS and FMSI was allowed both management powers, payment powers without supervision.

2. Whether current WP members accept it or not. There is a difference between Management Companies appointing their own people to the TC as GM’s when the management companies are owned by the GOV or GLCs and hence there is no direct pecuniary interests and when in the case of FMSS everything is owned and attributed to Miss How and her Husband and there is a direct pecuniary interests.

3. I could accept the need to appoint FMSS. I cannot accept the need to appoint FMIS whereby the shareholders were both the deputy GMS for lift EMS services. To the extent that there are only a few TC management companies and they refused to help , can the same be said of lift management companies ?

4. To an extent the problem can be laid at the head of the Sec Gen and Low. The people under his leadership trusted low and low I believe trusted miss how.

5. The trust was built over her management of the TC in Hougang for many years and it just seems that when faced with the problem of integrating seven town councils which in itself will be the largest town council in SINGAPORE, she lacked both the management and accounting expertise necessary to integrate all the bits and pieces.

6. FMSS at the end of the day seems to have bitten of more than they could handle, likewise FMSS was not adequately supervised by all the MPs and the leadership within the party for whatever reason.

He could have added, but didn’t, that the WP TC Chair and Vice are lawyers, albeit one was from SMU law school. And there is another MP that is a lawyer, a former partner is a top US law firm. Btw, one, M Ravi called these lawyers three,”cow dung” in another context.

One wonders why they didn’t draw up better conflict of interest mgt rules for the TC’s consideration. And if they did, why were these not implemented? Because Low trusted the Ms How?

Let’s be very clear, the PAP administration didn’t bully or fix the WP on this issue of bad record keeping. This was self-inflicted.The managing agent bears a lot of responsibility for the state of affairs. It didn’t keep proper records of who it was paying, and for what purpose. The AHPETC failed in its duty to monitor what the managing agent was doing.

The inability of the AHPETC to keep proper records is now personal.

I now live in Marine Parade GRC (Joo Chiat kanna rezoned). I’ve voted for the WP since I was able to vote (bicyle thieves, an ex-Woodbridge patient) because I believe that a one-party state is bad for S’pore; but do I want to live in a GRC managed by the WP, a party that couldn’t keep proper records, and is in denial over this fact? And which throws smoke on the issue. It can’t bluff me because I was a Hon Treasurer of a club https://atans1.wordpress.com/2014/11/23/ahpetc-sadly-pap-ib-gets-it-right/.

And I’m not alone: the neighbours (they are accountants, lawyers etc), and the really real Marine Parade residents I talk to, are wondering if the bad record keeping will continue. We know WP can keep the area clean and tidy, but can it keep proper financial records? https://atans1.wordpress.com/2015/08/16/pap-wp-dont-do-accouting/

 

—–

*Ms Sylvia Lim says the Aljunied-Hougang-Punggol East Town Council (AHPETC), has been singled out for “exemplary treatment” by the government.
She also called on the govt to “act with similar vigour, by withholding grants and commencing legal proceedings”, against gov’t depts and stat boards which have been found with financial irregularities in the Auditor-General’s Report.
Ms Lim made the call in her court affidavit on the hearing on the MND’s application on Monday.

(TOC)

**A statement seeking support from the public has been posted online as a petition calling for the government to investigate fully the recent slew of financial and accounting irregularities unearthed in the Auditor-General’s Office (AGO) Report.

“We… hope our government will investigate thoroughly the AGO audit lapses and come up with a official statement to address the concerns of the people,” the statement, posted on change.org, said.

“The lapses are both glaring and shocking as Singaporeans have all along place their trust in a government that has enjoyed above-board corruption-free governance for a very long time,” the statement by Gilbert Goh said.

(TOC again)

***TOC has again banned my Facebook avatar from commenting on TOC’s Facebook posts. It’s TOC’s right. But so like the PAP. But then WP is nothing more than PAP Lite and TOC is its poodle. And let’s see if a TOC founder stands as a WP candidate this GE.

PAP, WP don’t do accounting

In Accounting on 16/08/2015 at 12:09 pm

As Chairman and deputy chairman of the PA, ah Loong and Zorro should do what Khaw implicitly asked the WP leaders to do and what Lui may or not have done (I’ll blog one of these days on why the Ah Loong administrations sucks in comparison with that of his dad’s: never a clear message). I don’t know if Lui is willingly (or unwillingly) taking the rap for the failures of the MRT system, or he juz going MIA or AWOL to look at his monthly CPF statement and feel happy).

In the Budget earlier this year, the PA’s expenditure was increased 51.3% to over $1 billion.

Minister Lim Swee Say, Minister (Prime Minister’s Office) and Deputy Chairman of PA, said that the budget allocated to the PA “reflects a higher level of commitment by the Government towards promoting social cohesion and racial harmony.”*

Yet the management of the PA didn’t ensure that the systems were in place to ensure that the records on how this money (and earlier funds) were kept in accordance with the PA’s own internal rules.

The Auditor-General (AGO) is not happy. The People’s Association was flagged for various lapses in the Auditor-General’s Report, released on Wednesday (Jul 15), including lapses in management of tenancy contracts in Community Club/Centre Management Committees (CCMCs) and procurement lapses.**

The AGO had conducted audits on only 115 GROs out of the 1,800 over GROs, which as TOC points out “is only 6.39 percent of the total GROs which PA is in charge of”.

As TOC points out, with the recent findings by AGO on the GROs, one would have to be concerned or extremely concerned that public money may be misused or misappropriated due to the lack of understanding of proper accounting practices set by PA’s financial rules.

To recap:

There are 1,800 grassroots organisations under the People’s Association’s umbrella.
That’s a mere 6.4% of all the GROs.The Auditor General audited only 115 of them.

And already, the AGO found almost 40% of them with financial irregularities.

So while PA has said that it would conduct internal investigations and audits of its GROs, a more prudent method to ensure public monies would be lawfully used, is to get AGO along with a 3rd party auditor to audit the whole group of GROs under the PA.

In the meantime, the Minister of Culture, Community and Youth, Lawrence Wong, who oversees the PA, should be accountable and freeze the funds that are meant to be given to PA until the auditors can be sure that proper accounting process can be put in place for the GROs – and that public funds are duly protected from misuse.

Terry Xu

Now given that Khaw had recommended that the AHPETC commit hari kiri, and given that the PM is the chairman of the PA and Zorro Lim is the minister-in-charge of PA, why is Khaw silent on them performing hari kiri? At the very least, he should recommend that they do deep bows and apologies at the National Day rally next week.

But then the PAP believes that “All animals are equal but some animals are more equal than others”:

https://atans1.wordpress.com/2015/07/21/why-khaw-vikram-must-commit-hari-kiri/

https://atans1.wordpress.com/2011/03/14/learn-from-japanese-set-example-leh-elites/

But to be fair to the PM, Zorro and the PA and the PAP, rather than challenging the AGO and throwing smoke as the WP would (think AHPETC: there is lousy record keeping, so lousy that no-one knows if money has been stolen or not, and Pritam and his Auntie mentor have to do a manual check to report the correct arreas situation), a review by a newly formed Grassroots Finance Review Committee, to prevent a recurrence of procurement lapses flagged in a report by the Auditor-General’s Office (AGO) will take three months, the People’s Association said.

“The common lapses found in most of the grassroots organisations test-checked indicate that they may not be familiar with PA’s financial rules,” the AGO said in its report on Wednesday (Jul 15).

A statement released by the PA on Thursday said the committee will be chaired by a member of the PA’s board of management, Timothy de Souza. “Mr de Souza is a trustee of the Eurasian Association of Singapore and an experienced grassroots leader”, the PA said. He is also the auditor of a Neighbourhood Committee.

The other members of the committee are chief financial officer and member of the Auditing and Assurance Standards Committee of the Institute of Singapore Chartered Accountants John Teo Woon Keng and Mr Chiang Heng Liang, director of wealth management at an international bank and chairman of Kolam Ayer Citizens’ Consultative Committee.

The committee will be supported by PA senior officers, and they will be able to tap on expertise from the Ministry of Finance for advice.

The committee will review and recommend refinements to financial and procurement rules and procedures, especially with regard to AGO observations, the PA said. It will also propose measures to enhance compliance of financial rules and recommend measures to strengthen monitoring by staff. And, it will enhance training for staff and grassroots leaders.***

I’m still wondering what the WP are going to fix its accounting systems? Can some cybernut enlighten me? I got rezoned into Marine Parade and me and the neighbours (they are accountants, lawyers etc), and the really real Marine Parade residents I talk to, are wondering if the bad record keeping will continue. We know WP can keep the area clean and tidy, but can it keep proper financial records?

And we want to know if the WP can assure us that the excellent bus links to the other parts of S’pore will continue. Rightly or wrongly, we attribute these links to one Goh Chok Tok who was once the MP of the real Marine Parade.

Finally, the WP kept saying that a vote for the WP is a vote to keep the PAP honest. Who is keeping the WP honest? I mean someone has to take the rap for an accounting system that isn’t fit for purpose?

Will PritamS or his mentor step up for a deep bow? Or both?

But Ah Loong should set a good example, and take a deep bow next weekend. pigs will fly first.

———————————-

*He said  that out of the $339.6 million or 51.3% increase in the estimated Financial Year (FY) 2015 expenditure of the PA, $239.3 million (70.5%) is meant for the development of facilities for residents’ use.

These include the building of the Tampines Town Hub, construction of nine new CCs and two Water-Venture outlets; as well as to upgrade 28 existing CCs under PA’s 15-year upgrading cycle.

The increase of $100.3 million or 29.5% in operating expenditure will go into implementing the Pioneer Generation Ambassador programme where staff and volunteers reach out to seniors where they live, as well as supporting the work of the grassroots organisations (GROs) and Community Development Councils (CDCs) in assisting the needy and in building and bonding our multi-racial and multi-cultural communities.

(CNA)

**LAPSES IN MANAGEMENT OF TENANCY CONTRACTS

Of the 91 CCMCs test-checked by the Auditor-General’s Office (AGO), 35 did not obtain approvals from the relevant approving authorities for awarding 53 tenancy contracts, totalling S$17.78 million. Approvals were either obtained from committees which were not authorised to do so, or whose approval limits were below that of the contract values, the AGO said.

In addition, 10 of the 35 CCMCs did not obtain the relevant approvals for the direct award of 13 tenancy contracts without competition, worth a total of S$3.67 million.

“The number of lapses detected points to a weakness in the People’s Association’s monitoring of CCMCs’ compliance with its financial rules with regard to tenancy contracts,” said the AGO. PA has informed the AGO that is has since obtained covering approvals for the tenancy contracts.

LAPSES IN PROCUREMENT

Test-checks of nine grassroots organisations (GROs) – comprising four CCMCs, three Citizens’ Consultative Committees (CCCs) and two Residents’ Committees (RCs) – revealed non-compliance with PA’s financial rules, including the award of nine contracts totalling S$152,600 prior to obtaining approvals; the award of 15 contracts worth S$565,300 from the wrong approving authorities; not seeking approval for 10 direct purchases from suppliers worth a total of S$53,700; and not inviting quotations in writing for 13 purchases totalling S$187,900.

“The common lapses found in most of the grassroots organisations test-checked indicate that they may not be familiar with PA’s financial rules,” the AGO said. “They also reflect a lack of oversight by PA.”

The PA has since informed the AGO that it will review its procurement rules for GROs, to strike the right balance between competitive procurement and “expeditious decision-making” on the ground.

LAPSES IN ENGAGING TRAINING OPERATORS

According to the report, the AGO found common lapses in engagement of training operators and the collection of course fees across most of the seven grassroots organisations checked.

For example, four GROs engaged operators directly without calling competitive bids under eight contracts, totalling S$311,800. “Hence, there was no assurance that the GROs were able to obtain the most advantageous bids for the courses,” the AGO said.

One RC awarded a contract for tuition services with an estimated revenue of S$1.11 million to the incumbent operator through a quotation exercise, when a tender was required. There was no evidence other operators were invited to quote, the AGO said.

Four RCs test-checked could not produce evidence that they had carried out audit checks on course fees – totalling S$1.26 million – collected by operators on the RCs’ behalf, according to the report. The PA said that the RCs had conducted random checks on the collection of the fees, but these went undocumented. The course fees have been fully collected from the operator, PA added.

One RC did not take any action when an operator repeatedly delayed handing over course fees collected on behalf of the PA, totalling S$414,700, every month from April 2013 to July 2014. This exposed the RC to the risk of the operator defaulting on the payment of course fees, the AGO said.

LAPSES IN MANAGEMENT OF RELATED PARTY TRANSACTIONS

The AGO’s checks found that the chairman of a CCC was involved in approving the award of two contracts worth a total of S$32,000 and corresponding payments to a company of which he was a member of the senior management. For one of the awards, another CCC member involved in the approval process was both a director and shareholder of the company, the AGO said.

The CCC chairman also approved payment for a purchase worth S$1,500 from another company where he was both a director and shareholder.

In these cases, the two CCC members involved did not declare their interests in the transactions, the AGO said. “As a result, there was no assurance that the transactions were conducted at arms’ length.”

PA acknowledged that the chairman should not have approved the payments, but checked and found that there was no irregularity in the payments as the amounts tallied with the quotations and the work tendered.

Test-checks revealed seven instances where the CCC chairman was involved in approving his own claims, totalling S$114,767 – a “clear conflict of roles”, the AGO said. In three of these payments, no supporting documents were available.

The PA’s response was that the chairman had inadvertently approved his own claims, and said that the vice-chairman and treasurer will endorse future payment vouchers instead.
MP for Sembawang GRC Khaw Boon Wan said the grassroots leader in question was from Admiralty CCC and that he has stepped down to facilitate a full investigation.

“I am glad that the Investigation Panel found no evidence of dishonesty. Nonetheless, it was a related party transaction that was not declared,” Mr Khaw said in a statement. “The CCC will study the investigation report, and review its procedures to ensure that such lapses do not recur.”

Fellow MP for Sembawang GRC, Vikram Nair said he was saddened to learn of the findings by the AGO and that the grassroots leader concerned has “served with distinction for many years”. The man is giving full cooperation in the investigation, Mr Nair said.

ISSUES WITH FUND UTILISATION REPORTS

The PA obtained excess funding from the Citizens’ Consultative Committee ComCare Fund (CCF) from the MSF, amounting to S$84,394 over two years, due to errors and omissions in the updating of disbursements at seven CCCs checked.

The errors include duplicate entries of CCF disbursements, incorrect amounts recorded and inclusion of financial assistance that was not to be funded by the CCF. Disbursements were entered into the system by an officer without any independent checks, the AGO found.

These errors led to inaccurate CCF usage reports submitted by PA to MSF, ranging from an overstatement of S$225,703 in some cases to an understatement of S$120,210 for FY2012/13 and 2013/14.

In response, the PA said it was conducting a one-off reconciliation exercise for all CCCs to update and correct the CCF utilisation reports, meant to be completed by June this year.

CNA

***The committee will strengthen the supervision of its 1,800 grassroots organisations (GROs). “The committee will also recommend suitable measures that would enable our 37,000 grassroots leaders and volunteers to continue to serve the community’s best interests while maintaining good governance and sound financial practices.”

Additionally, a hotline has been set up to help GROs with queries on correct procurement procedures. The number is now active and has been communicated to GROs internally.

(CNA, I think)

PwC’s less than Noble disclaimer

In Accounting, China, Commodities, Energy on 11/08/2015 at 1:29 pm

FT’s Alphaville drew attention to PwC’s disclaimer: PwC said Noble records profits on long-term sales and marketing deals in a manner consistent with industry practice

So if it turns out that “There may be a fundamental difference between a company following the rules and a company presenting a true picture of its financial position,” (Andrew Fastow, the infamous treasurer of the even more infamous Enron, to a FT conference), PwC is not liable. https://atans1.wordpress.com/2015/07/03/noble-house-airasia-ceos-spin-meisters-take-note/

No wonder PwC is a “professional services firm” where the oldest profession is prostitution.

Forgotten the issues, here’s Michael Dee’s letter to employees: http://www.sharesinv.com/articles/2015/05/29/open-leter-noble/?utm_source=email?

He was at the very least right right that their jobs were at stake.”Noble said it was targeting a 16 per cent reduction it its global workforce to just over 1,500 people by the end of the year.” reports the FT.

Noble House, AirAsia, CEOs, spin meisters take note

In Accounting, Airlines, Commodities, Financial competency, Logistics on 03/07/2015 at 1:25 pm

My eyes rolled when I read the CEOs of above two cos recently said that their cos follow the accounting rules. (Remember, credible doubts have arisen over whether their accouting reflects their financial position.)

The best riposte to “We follow the accouting rules” came recently when an ex-convict recently addressed a FT conference.

“There may be a fundamental difference between a company following the rules and a company presenting a true picture of its financial position,” said Andrew Fastow, the infamous treasurer of the even more infamous Enron, to a FT conference.

Or as he puts in another way, that it’s possible for a company to comply with accounting standards while at the same time painting a misleading picture of its real financials.

I tot it tragically funny when he said he went to prison partly for doing things that got him a best CFO award: innovative off-book entities.

 

 

Another week, another Noble Bahru?

In Accounting, Airlines on 20/06/2015 at 4:27 am

Debt of 11.5 billion ringgit ($3.1 billion) is already uncomfortably high for an outfit expected to make 1.9 billion ringgit in EBITDA this year. AirAsia’s part-owned sister airlines, especially in Indonesia and the Philippines, owe it increasing sums: amounts due from associates were nearly 2.5 billion ringgit at the end of 2014.

The gloomy case, as made by Hong Kong’s GMT Research, is that this cannot last. AirAsia is booking profits from affiliates that it cannot collect. While restrictions on foreign ownership mean it is only a minority shareholder, it effectively controls these airlines and should consolidate their accounts. Facing up to reality would force a big equity issue.

AirAsia counters that its accounts are transparent, debt is coming down, and cheap fuel and reduced competition should make for a “very good year”. Selling and leasing back planes will help cut debt. It’s also planning to publish pro-forma consolidated accounts.

Fernandes says local partners in Indonesia and the Philippines will each inject over $80 million of fresh equity, and both units will sell $100 million-plus of convertible bonds, before floating in 2017. Some of this will be used to pay back sums owed to the parent.

Well, perhaps. But new investors in the affiliates will need to be comfortable with much of their cash going to repay debts, while also believing in a bright future for these units. As HSBC analysts note, both are sub-scale and face powerful local rivals in Lion Air and Cebu Air.

http://blogs.reuters.com/breakingviews/2015/06/18/airasia-takes-multi-stop-route-to-capital-raising/

The real moral of the stories of Noble and AirAsia is that when one makes money or is in fashion, no-one cares about accounting details, But when the fashion changes, or one loses money, the daggers come out and the hyenas and vultures circle.

And don’t like a lost co, set up a website and slime away

Where were FIFA’s auditors?

In Accounting, Corporate governance, Footie on 12/06/2015 at 2:32 pm

As FIFA Scandal Grows, Focus Turns to Its Auditors. Despite longstanding suspicion of corruption, FIFA has received a clean bill of financial health for 16 consecutive years from KPMG, one of the world’s top auditing, accounting and consulting firms.

“It’s legitimate to raise questions about the effectiveness of the audits, given that the risks were already widely rumored.”
Barry Jay Epstein, a financial-reporting expert, on KPMG giving FIFA a spotless record of financial health.

NYT Dealbook

Run on the Noble House?

In Accounting, Commodities on 10/06/2015 at 10:46 am

Sometime back I wrote

Noble said it had secured US$2.25bn of commitments for a new credit facility.

It retains the confidence of its lenders, giving them enough info to keep them lending. The problem for investors is that we small investors will be the last to know when banks cut credit lines.

https://atans1.wordpress.com/2015/05/06/noble-what-matters/

From FT

The $2.3bn revolving credit facility has also come under scrutiny from analysts and traders after at least three tranches of the three-year loan were offered to other banks in the secondary market.

“”It could indicate the banks may be losing some confidence in the company,” said Wei Bin, analyst at Maybank Kim Eng in Singapore.

A hedge fund manager said the latest sell-off was notable because it was accompanied by large daily trading volumes.

“It is now trading in such volume it appears some of the major shareholders are changing their view on the stock,” said Robert Medd at GMT Research, an independent research firm. GMT has published several reports critical of Noble.

Phew glad I wasn’t tempted: https://atans1.wordpress.com/2015/05/14/noble-why-im-not-tempted/

 

Noble: Why I’m not tempted

In Accounting, China, Commodities, Corporate governance on 14/05/2015 at 1:31 pm

Many of Noble’s operations and investments are exposed to the slowdown in China.

And the Chinese economy is still slowing. And the engine of growth is no longer exports or infrastructure spending  or construction. It’s the service sector.

Maybe when I hear that Noble is starting to shipping Pinoy gals to China as wives for barren branches, will I buy the stock.

Noble: Two good reasons to buy?

In Accounting, Commodities, Uncategorized on 10/04/2015 at 7:13 am

A trading house requires lots of working capital (i.e. borrowed money). The short sellers by raising issues about “aggressive accounting” are trying to get its facilities cut.

Well

— S&P believes the company deserves its investment grade credit rating; though it would like to know more about the assumptions.

— Noble’s banks have juz renewed a US$2.2bn credit line.

So it’s up to Muddy Waters to make sure that the mud sticks to its allegation of “aggressive accounting”. .

But it’s not so easy because if the price falls substantially, the banks get scared and change their minds while S&P might get scared that its missing something. It could then say that share price fall affects the rating.

Not easy to make money in stock markets. ask Ho Ho Ho about StanChart, Merrill Lynch and Chesapeake.

Noble CEO gets it, ministers don’t?/ Noble a Buy?

In Accounting, Political governance on 20/03/2015 at 12:12 pm

“We unfortunately live in world where knowing that you run your business professionally is not enough,” the CEO of Noble wrote in a letter to stakeholders in February. “You must be able to prove it.”

But will he walk the talk? Two big funds* think so and have been buying. Maybe they have been assured on the following?

[A] chunk of the profits Noble reports comes from non-cash gains created by “marking to market” long-term contracts (eg, to supply coal) and derivatives it holds. Iceberg is not accusing Noble of fraud, but it is questioning how realistic these valuations are and asking how much of the company’s reported profits are the result of this practice. Noble reported that at the end of 2014 the net fair value of these positions was $4.6 billion, equivalent to 91% of its book value.

It is hard to tell from what Noble discloses in its accounts whether its valuations are indeed fair; and since it is also unclear how much of its profits come from such changes in valuation, it is difficult to assess how robust its profits are. Noble did not respond to requests from The Economist for comment. The firm’s cashflow has been weak. Over the past three years it has booked net profits of almost $1 billion but negative cashflow of almost $2 billion, after working-capital, capital-investment and interest costs.

On March 5th it issued an 11-page rebuttal, suggesting that a disgruntled ex-employee was behind Iceberg. It also gave more detail about the “fair value” positions. They reflect over 12,000 individual contracts, almost half of which mature within two years. Over the past three years the firm has realised $800m of cash from such positions. Yet the rebuttal omitted a vital piece of information: how much profit has been booked from these positions. Without this nugget it is hard to form a sensible judgment about Noble’s books or health.

Emphasis mine

http://www.economist.com/news/business/21646233-big-asian-commodity-trader-attacked-anonymous-online-critic-nobbled

*A unit of insurer Prudential, and Invesco increased their stakes in the company. [Added at 1.40pm]

Olam: Snake bites itself

In Accounting, Commodities, Corporate governance on 06/12/2012 at 10:00 am

Opps looks like Olam tried to be too clever by half. By calling a rights type issue but not answering two of Muddy Point’s questions (that it is spending lots of $ on lousy investments and the restatements), investors have decided to sell given that there will a lot more debt, at expensive prices, a possible dilution, and that Muddy Waters might just be right.

Then there is the cred of management: saying it had lots of cash but then calling yet another bond issue. And having to retract a statement on the approach to Temasek.

In such a confused situation, investors might as well sell esp with the year end in sight.

And on a technical issue: leaving the warrants to be priced tomorrow was asking for trouble.

All in all, management and its investment banks have not covered themselves in competency.

Update:  “The latest Temasek-backed transaction raises significant issues, as it is extremely expensive debt and equity capital, capital that Olam spent a week telling the market it didn’t need,” said Dee. “Muddy Waters is not the issue here, it is Olam’s strategic and financial decisions that have brought this situation to a head.”

Jap stocks cont’d trading below book value

In Accounting, Financial competency, Japan on 17/09/2012 at 7:06 am
On Wednesday last week “the broad Topix index closed at 0.89 times book value, a whisker away from its widest discount to the MSCI World for five years, and near its lowest level relative to the S&P 500 for almost eight years,” reported the FT.
 
What is cheap can stay cheap. But do remember that in the 1950s and 1960s, a few ang mohs bot Jap stocks because they were very cheap by Western standards. They became investment legends.

CHC: Charity, Denial & Persecution

In Accounting, Humour on 29/06/2012 at 6:08 am

(Or “Answering some issues raised by the CHC case”, or “Can’t blame CHC members from being defensive” or “Netizens rushing to crucify before hearing the evidence”)

One question that has been asked on the internet, “What happens if all the members of City Harvest Church sign a resolution giving retrospective approval to what the pastor and the others charged are alleged to have done? Can they escape the consequences of the charges and the Charity Commissioner’s findings?”

The answer is: Even if all the church members agree to give their retrospective approval, nothing changes. By becoming a charity, CHC becomes subject to the Commissioner of Charities, and all that entails. It is no longer a private organisation, and the laws and regulations relating to charities applies. After all by becoming a charity, CHC deprives tax benefits: in return it has to play by the law and the Coc’s regulations. These include not misusing the chariy’s funds. Cannot suka suka choose what to obey. Not their grandfather’s money: it’s the money of Harry’s Law. Harry’s Law is more like obeying God: cannot pick and choose what to obey. It’s either God’s way or the highway to Hell. Same for Harry’s Law.

Another question raisen on the internet is, “Has the CoC defamed a CHC executive committee member?

The man is in denial. CoC is justified in giving details of its findings. Only if he can prove that at least one of the CoC’s findings is wrong, can he win a defamation suit.

Are the church members supporting Kong and the others in denial, and too defensive in defending Kong, wife and friends?

Those netizens who are anti-CHC, Kong, the others charged, Auntie Sun and the “prosperity” gospel can reasonably argue that the members should accept the CoC’s findings.

But as the appeal process has not even begun, church members can reasonably point out that their support does not mean they are in denial.

They are waiting to see the evidence. After all, netizens are always telling S’poreans that, “The PAP government is always wrong, never ever right”. So why should it be any different in this case? Because netizens don’t like pastor Kong, Auntie Sun, the CHC, and the “prosperity” gospel, so everyone got to trust the PAP govt that it does no wrong

And anyway, only charges have been filed against the pastor and friends. They have yet to be found guilty, and the law says that a person is innocent until proven guilty. And the bar is very high: beyond reasonable doubt, not on the balance of probabilities. The latter is the standard the CoC uses in his investigations.

So those who want to scourge, give gall wine, crown with thorns, crucify and spear CHC, Kong, the others charged, Raunchy Auntie and the “prosperity” gospel, hold your instruments of torture and death. Bit too early to drag them to slow and lingering deaths by dragging them behind Satan’s chariots.

Let Harry’s Law pass judgement first.

Seriously, it’s sad to see so many netizens waste and squander the after-effects of the unmasking of STOMP’s (and SPH’s) fabrications. Juz because they don’t like Kong, wifey, friends and the “prosperity” gospel doesn’t mean they should behave like the journalists and editors of the constructive, nation-building media at their howling, baying, snarling best. 

Only the PAPpies will be happy: netizens are vigilante comboys and cowgals that S’poreans have to be protected against.

HSBC: Which number to focus on?

In Accounting, Banks, Financial competency on 01/03/2012 at 1:55 am

 (Or “HSBC: Glass half empty or half full?” or “The difficulty of analysing a company esp a bank”)

HSBC Holdings, one of Europe’s biggest banks, said on Monday that its profit rose 27 percent last year in part because of greater demand for loans in the developing world.

(“Profit” here means profit attributable to shareholders)

http://dealbook.nytimes.com/2012/02/27/hsbc-profit-rises-on-demand-from-emerging-markets/?src=dlbksb

But FT preferred to focus on the 6% fall in pre-tax underlying profits to US$17.7 bn.

But pre-tax profits actually rose 15% to US$21.9bn. But FT, rightly in my view, took out the US$13.9bn gain in the value of the bank’s own credit. This is Alice-in-wonderland accounting that banks have to use (some happily, some reluctantly). The weaker banks love it.

HSBC is currently the most profitable Western bank, with its nearest rival, JP Morgan having profits 15% lower.

HSBC Asia Pacific posted profits before tax of US$13.3 billion – 15% more year on year. The region accounted for 61% of the group’s total pre-tax profit.

As regards HSBC S’pore, it posted a pre-tax profit of US$595 million for FY2011, up 14% from a year ago.  A lot better than OCBC’s and UOB’s S’pore operations. I plan to blog on how well Citi’s, HSBC’sand StanChart’s S’pore operations compare to our three local banks, one of these days. BTW StanChart juz reported that its pre-tax profit from it’s S’pore operations has hit US$1bn, up 40%.

Why PM had three accountants on his pay review committee?

In Accounting, Financial competency, Wit on 19/01/2012 at 5:39 am

There were three trained and highly experienced accountants (the chairman included) on the eight person ministerial salary review committee, the most from any single profession.

Maybe the reason is that accountants can do magic with numbers? At least that is how it appears to us “lesser mortals”?

Example: The accounting profession can make a sum of money appear as US$4bn for the co that is paying out the sum and as US$6bn for the company receiving it.

http://dealbook.nytimes.com/2011/12/20/att-and-t-mobile-whats-2-billion-among-friends/?nl=business&emc=dlbkpma22

And there is the old joke that the best accountant is one that will ask you, “What answer do you want?” when you ask him, “What is 2+2”?

Accounting tricks that are still around

In Accounting on 06/11/2011 at 6:59 am

MF Global may have engaged in “window dressing,” reducing its level of debt before reporting its finances each quarter so as to appear less risky to investors, according to an analysis by the Wall Street Journal.

Despite all the laws enacted since Enron and Lehman Brothers, this trick is still being used. Other tricks still in use:

— accelerating revenues;

— delaying expenses;

— accelerating expenses preceding an acquisition;

—  “Non-Recurring Expenses”;

— “Other” income or expense;

— off-balance-sheet items; and

— synthetic leases.

More details on above

What Is A Cash Flow Statement?‏

In Accounting on 03/11/2011 at 8:45 am

http://www.investopedia.com/articles/04/033104.asp?partner=basics102811#axzz1cbAaBrGa

Banks’ Alice-in-Wonderland Accounting

In Accounting, Banks on 28/10/2011 at 7:02 am

The problem with a bank’s balance sheet is that on the left side nothing’s right and on the right side nothing’s left.

Think Lehman’s and Dexia’s balance sheets. One day AAA, six months’s later rubbish. That fast leh?

Profit and loss accounts are just as rubbishy. Recently UBS’s third quater profit fell to 1.02 billion Swiss francs (US$1.2 billion) in the three months ended Sept. 30 from 1.66 billion francs in the period a year earlier. The trading loss of  1.85bn Swiss francs (alleged caused by a rogue trader) and charges linked to a cost-cutting plan were partly offset by an accounting gain on the bank’s own credit of 1.8 billion francs and the sale of some investments.

Now this accounting treatment was not not only used by UBS. According to the FT’s Lex, four-fifths of the US$16bn net profits  in the latest announced results of (BoA, Citi, JPMorgan, Morgan Stanley and Goldman Sachs came from using used the same accounting treatment of the banks’ own debts.

Lex describes the accounting treament thus: ” Try this on your credit card company: your creditworthiness has weakened, so you write down the value of what you owe them to reflect the greater riskthat you will not pay it back and credit the difference to your personal account. That is what exactly accounting allows”.

UBS: What else can go wrong?

In Accounting, Banks, GIC on 27/10/2011 at 6:36 am

Readers will know by now that UBS, where GIC is a major long-term (and suffering)  investor, is planning to reduce the scale of its investment banking operations, the source of its on-going problems since 2007.

But they may not know “What they are trying to do has never been done before,” Christopher Wheeler, an analyst at Mediobanca, said. “They want to shrink the investment bank by choice, which means unwinding positions without loss and running down their books while keeping the morale among staff, and it’s unclear who’s running the shop.”

And don’t be fooled by its latest results. Despite being hit by a 1.85bn-franc loss from deals made by an alleged rogue trader, it just made  a better-than-expected third-quarter net profit of 1bn Swiss francs (US$1.1bn).

The loss was almost entirely offset by a 1.77bn-franc accounting gain that came from changes to the value of the bank’s own debt. One of these days, I’ll blog on the Alice-in-Wonderland accounting that allows this type of gain to materialise. According to the FT’s Lex, four-fifths of the US$16bn net profits  in the latest announced results of (BoA, Citi, JPMorgan, Morgan Stanley and Goldman Sachs came from using used the same accounting treatment of the banks’ own debts.

GIC: Smoke & mirrors

In Accounting, Corporate governance, GIC, Political governance on 27/09/2011 at 3:21 pm

No, this is not a rant abt GIC’s performance or how it misleads the public abt its performance. It’s about how its inability or unwillingness to communicate with us, the public, can be self-defeating, leading to more questions being asked, especially on why it keeps relying on spin rather than facts, as illustrated by this media statement from GIC.

In a statement to the media last week, the Ministry of Finance said, How well GIC performs is not a secret. Its mandate is to preserve and enhance the international purchasing power of the reserves over the long term. Hence, it publishes its 20-year annualised real rate of return.

GIC also reports its returns over five- and 10-year periods as intermediate measures of its performance.

 GIC’s Performance as per annual report

Period Government’s nominal rates of return in US$ for period ended 31 March 2011 (%) 
5-Year 6.3
10-Year 7.4
20-Year 7.2

Well its performance might be as well be secret.

The problem is that these performance numbers raise questions on their methodolgy, to which answers are not available. I will only raise one issue, but this one issue will take acres of space. TOC has raised other less technical issues.

My grumble is that there is no disclosure on whether the functional currency is US$ or S$. By “functional currency”, an accountant means the currency in which the accouts are prepared. We only know that the returns are presented in US$, the presentational currency. This does not imply that the functional currency is US$.

If the accounting of the funds under mgt are done in S$, the performance results would have included the exchange loss arising from the US$ depreciation against the S$. So if its functional currency is S$, but its presentation currency is US$, then all exchange losses arising from US$ depreciation against the S$ will have been taken into account.

If however if the  functional currency is US$, then its US$ denominated assets and US$ investment income will not be impacted by US$/S$ movements. And any analysis would have to take US$ depreciation into account.

The differences can be great. (Please click “Read more” to read the article in full, if you are reading from the Home page. There is a necessarily long-winded example to illustrate what I’m trying to say.)    Read the rest of this entry »

The trouble with auditors

In Accounting, Corporate governance on 05/01/2011 at 5:25 am

Today’s financial industry may be too complex and too subject to opinions for the accountants to get right, even if they want to. Witness PricewaterhouseCoopers, which audited both Goldman Sachs and AIG. At the height of the financial crisis, the exact same securities on each firms’ books were valued at radically different prices. In other words, there was no way to compare the two firms’ results.

The complexity makes the accountants even more susceptible to pressure from management. That pressure is all too real. And the problem in Enron’s case was never the consulting business. It’s that the accountants forgot who they were working for. They’re supposed to work for investors, not management. Their job is to make sure investors have a fair chance at assessing a company’s financial condition.

————————————

Put simply, the unfortunate truth is that corporate bad behavior often pays. Thus, if accountants always behave like homo economicus — the hyper-rational, purely opportunistic hero of economic theory — rampant frauds are only to be expected.

—————————–

NYT article

Sino-E: Where’s the $14m?

In Accounting, China, Corporate governance on 29/03/2010 at 5:08 am

In the middle of March, BT reported that the CEO declined to comment on the S$14 million cash reserves the group’s former executive directors claimed to have kept in a Xiamen bank, saying: “We haven’t sent the auditors in yet, so I don’t want to make any comments on the cash as that could be quite misleading.”

Have the auditors gone in yet? And if not, when? Sin0-E shld be telling its shareholders.

[Update on 18 April 2010 — Co says money is there and that it has been secured]

As a group of managers have asked for the opportunity to subscribe for 20% or more of the group’s issued paid-up capital in the form of new shares, shareholders could be reassured that there is value in Sin0-E, something that the CEO was quick to point out. But they should worry that this request was tied to a pledge of support to the new directors.

A polite threat?

Buybacks: problematic in bear markets

In Accounting, Corporate governance on 03/03/2010 at 5:20 am

Based on filings with SGX in the last week of February, “the buybacks among listed firms surged last week, after very low activity for three straight weeks. A total of six companies posted 17 repurchases worth $2.1 million. The number of transactions was more than the seven repurchases from Feb 1 to 19. Among the stocks that recorded significant buybacks last week were KTL Global, HTL International, and InnoTek”, reports BT.

The theory is that a company buys back its shares when it thinks the market is undervaluing the shares.  But buying in a bear market can cause problems especially since bear markets can only be recognised in hindsight.

In a bear market, buybacks become a bad tool of creating shareholder value, and can cause management problems if they want to issue  new shares to fund an investment.

One Warren Buffett said a few months ago, ” What we know with certainty, however, is that Kraft stock, at its current price of $27, is a very expensive “currency” to be used in an acquisition. In 2007, in fact, Kraft spent $3.6 billion to repurchase shares at about $33 per share, presumably because the directors and management thought the shares to be worth more.

‘Does the board now believe those purchases were a mistake and that Kraft’s true value is only the current price of $27 per share – and that it is therefore fine to structure a major acquisition based upon that price? Would the directors use stock as merger currency if the price were, say, $20 per share? Surely the true business value of what is given is as important as the true business value of what is received when an acquisition is being evaluated. We hope all shareholders will use this yardstick in deciding how to vote.”

S-Chips: putting their cash into S’pore banks

In Accounting, China, Corporate governance on 02/03/2010 at 5:38 am

The ST suggested that S-Chips should deposit their cash in in DBS, OCBC or UOB and not Chinese banks.  This could reassure investors that the S-Chips’  cash were safe.  This would in turn help the shares to trade above their net cash per share.

Err might not be a gd idea. Forget about the practical reasons like

— the companies not having the cash they claim they have; or

— withdrawing the cash after depositing it for reporting purposes and deposting it again just before the next reporting date. To prevent this the banks would need clear mandates to report such actions, and manpower and systems to track such movements.

It could be that the investors are (or will be) concerned that the cash could be used up in unprofitable businesses. Chinese dot.com companies listed on Nasdaq were trading below their net cash positions after the dot.com bust. Investors rightly assumed that they would not see the cash.The cash would be used to fund internet ventures etc. Anything else except be returned to shareholders.

They were right.

Sino-E’s board are powerless/ SIAS needs to growl louder

In Accounting, China, Corporate governance on 25/02/2010 at 5:31 am

I’ve always wondered why SIAS had been quiet on the lack of news from Sino-E’s board on what was being done to protect the assets and business of the company. I had tot that maybe company had quietly assured SIAS that things were in motion but that publicity could cause problems.

So I was surprised to read in Wednesday’s papers that SIAS had gone public on Tuesday, saying it had asked asked questions since December, but had been ignored. ST also reported that Sino-E had responded in a sense. No wonder it didn’t earlier reply or inform shareholders, the news is not reassuring. Bugger-all has been done other than reconstituting the board and appointing a CEO. Production has ceased, and the cash has not been secured.

Though to be fair, the board is S’pore-based, while business, assets are in a faraway district in a faraway province from Beijing or Shanghai in China.  And the board could could argue that since the shares are still suspended, there was no need to upset shareholders with the bad news.

Let’s hope that SIAS has learnt that a nicely, nicely approach could be taken as a sign of weakness and impotence.  More and louder growls, pls. If nec, howls pls. Wolves are feared: lap dogs and toothless mutts are not.  As MM has said, S’poreans needed to be spurred.

Base Metal into Gold: no not Alchemy. It’s all in the Accounting

In Accounting, Corporate governance, Investment banking on 13/12/2009 at 9:58 am

Here’s an explanation of how accounting turned an investment banking loss of £160m into a profit of £3.65bn. And so made “hundreds, and possibly even thousands, of staff at the state supported Royal Bank of Scotland group (RBS)” eligible “for bonuses totalling about £1.5bn”.

Wow!

The moral of the story: be sceptical, very sceptical of the headline financial numbers. And read the footnotes cynically.

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