With the recent spate of SGX companies taking huge write down of assets and frauds still taking place as much, it got me thinking- Does Singapore have a weak financial regulator or is it there something amiss with this accounting practices? Most of us will be familiar with Noble’s huge write down on its financial derivatives and the subsequent loss in shareholder value.
All these while, an independent research house, Iceberg, has been indicating that Noble acquired over-valued its financial derivative possessions. What made it worse was that Noble’s own external auditor, Ernest & Young, got for years been offering Noble the clean costs of health. Although it holds true the technique is sound, the inputs/estimates Noble got given was unrealistic.
This begs the question: Are our auditor’s really looking at the authenticity of numbers by thinking on the inputs or are senior partners just blindly putting your signature on off? In the end, many university students have learnt of the idiom – “Rubbish in, Rubbish Out”; hence I question if many of our practicing auditors do take center of the idiom when doing their work.
- 2012 Form 4952
- 1862-1863 Lincoln Over Rules Debt-Based Money and Issues Greenbacks to Fund the War
- Scenario 2 – faster development of 6% per calendar year
- 14 East Spring Street
- 1215 Hillside Street,
- An Investment Club
- Is the timing to begin planning my philanthropic legacy
- > Perhaps we can stop assuming product technology equals development
This brings me to the second case. Case 2- Tuaspring and Hyflux. That is another classic story of “Rubbish in, Rubbish Out”. 1.4 billion in book value with a life expectancy of 20 more years. Hyflux’s estimations, but good sense and Google searching would have demonstrated that Singapore’s power industry was oversupplied where power result supply was double that of demand.
Even if the upward reversion is true, it will take time. Hyflux definitely could have taken an impairment or for the poor outlook that is happening now. Unsurprising Hyflux’s external auditor, KPMG, are still giving the OK for Hyflux’s stated publication value until FY2017. With all the recent need to market Tuaspring to rescue itself, I am confident Hyflux will be booking an impairment on its own and not because KPMG has recognized the inputs to Hyflux’s valuation model will not hold true. It creates me wonder if our auditors are indeed verifying the authenticity of the reported balance sheet numbers of our companies.
In addition, with recent years, we have noticed just how many companies with overseas operations have been found to report non-existent cash amounts in their balance sheet. It creates one wonder the robustness of our auditors in performing their homework on overseas procedures of listed companies here. In fact, easily am directly to enjoy my clairvoyance capability, my crystal ball says an outlined company you start with “S” is dodgy. The company’s market capitalization is much lower than its stated online asset value and can easily complete any CNAV analysis value investing model; amazingly no hedge account or investment account is committed to it!