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  1. #1
    Thailand Expat
    William's Avatar
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    Creative accounting cases decline by half

    STOCKS CORPORATE GOVERNANCE

    Creative accounting cases decline by half


    NUNTAWUN POLKUAMDEE
    A number of listed companies continue to rely on ''creative accounting'' to dress up their financial statements, according to the Securities and Exchange Commission.

    Tawatchai Kiatkawanakul, am assistant director for the SEC's accounting supervision department, said accounting abuses covered a broad range of areas, including misreporting to avoid taxes, failure to accurately reflect a company's financial position or obligations and misrepresentation of key information.

    More serious cases include siphoning of assets and funds from a company by management, the use of funds to prop up the company's share price and other abuses to avoid a company's transfer into the Stock Exchange of Thailand's rehabco sector.

    Still, the SEC noted that out of the 517 listed companies submitting financial statements for 2006, only five were singled out for special monitoring for possible accounting or governance violations, compared with 10 the year before.

    The SEC has directed two companies to undergo special audits, compared with four the previous year, while seven companies were ordered to amend their 2006 financial statements, down from eight in 2006.

    Amendments included directives to recalculate amounts booked for doubtful debt, accrued revenues, revenues booked from property sales and funds invested in subsidiaries. In contrast to 2005, no listed company last year was ordered to revise their accounting for asset depreciation or liabilities.

    But the SEC noted that 22 companies were ordered to clarify connected transactions last year, while three companies decided to void questionable transactions altogether.

    Mr Tawatchai said in some cases, depreciation charges were booked for unreasonably long times, to help minimise the impact on a company's accounts.

    Medical firms, for instance, might book depreciation for medical equipment over a 15 to 20 year period and computer equipment for 15 years, a lengthy period of time considering the rapid changes in technology in both fields.

    In other cases, companies will over- or under-value property and assets to manipulate their accounts.

    ''Most companies are managing their accounts in line with generally accepted accounting standards. Only a few are trying to evade the rules and dress up their books,'' Mr Tawatchai said.
    ''Creative accounting defrauds investors, who deserve to see accurate information about their companies. Investors should consider carefully the notes of the auditors, and avoid companies that have disclaimers or notes listing areas that could not be confirmed.''

  2. #2
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    here ya go Willy

    "517 listed companies submitting financial statements for 2006, only five were singled out"

    the remainder 512 paid better accountants to do a better creative accounting job

    Creative accounting is like doing magic - liabilities becoming assets, profits becoming losses

    depending who is viewing your books, the boss, the investor ... the tax man (often different sets of the same books)

    most incredible things happen when "good" accountants, lawyers, auditors and contract admins start "cooking da books"

  3. #3
    Thailand Expat
    Whiteshiva's Avatar
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    Quote Originally Posted by William View Post
    Still, the SEC noted that out of the 517 listed companies submitting financial statements for 2006, only five were singled out for special monitoring for possible accounting or governance violations, compared with 10 the year before.
    And I guess the names of the 5 will never be revealed to the public......

    Bit like a couple of years ago when it was stated that the Bangkok administration had determined that more than a thousand residential and commercial buildings in Bangkok were declared unsafe and in violation of the building code, but would not publicise the names.....

    TIT......
    Any error in tact, fact or spelling is purely due to transmissional errors...

  4. #4
    watterinja
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    Have to wonder about how high the honesty bar is in Thailand. Imagine if a strict Euro-type audit were performed. Wonder how many would fail then?

    512 / 517

  5. #5
    I am in Jail
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    Quote Originally Posted by Whiteshiva
    And I guess the names of the 5 will never be revealed to the public......
    Actually most market players know who they are, so no secret, really.

    As for creative accounting, it's the same everywhere, even in Europe. Don't think for a minute that tough Euro regulations stop management from playing with numbers. They just don't care. Same in the US. Everybody is doing it but Thailand being a small pond, it's easier to see it and more annoying.

    The SET companies also have a lot of creative ways to distribute dividends and dilute earnings with additional "bonus" shares. That part is more annoying though. It's all in my online blog so I can remember who they are.

    This shouldn't stop you from benefiting from your market investing as it will not stop no matter what. Until the next financial crisis of course.
    Last edited by Butterfly; 20-04-2007 at 05:38 PM.

  6. #6
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    Quote Originally Posted by Butterfly View Post
    Quote Originally Posted by Whiteshiva
    And I guess the names of the 5 will never be revealed to the public......
    Actually most market players know who they are, so no secret, really.
    Damn - if only we had some of those here we would find out.....

  7. #7
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    Just one percent failing, now that really sounds like nothing, unbelievable.

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