Creative accounting cases decline by half
Nuntawun Polkuamdee. Knight Ridder Tribune Business News. Washington: Apr 19, 2007. pg. 1
Nuntawun Polkuamdee. Knight Ridder Tribune Business News. Washington: Apr 19, 2007. pg. 1
Abstract (Summary)
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.
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.
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.
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Apr. 19--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."
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.
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.
span class="fullpost":>
To see more of the Bangkok Post, or to subscribe to the newspaper,go to http://www.bangkokpost.com. Copyright (c) 2007, BangkokPost, Thailand Distributed by McClatchy-Tribune Business News. Forreprints, email tmsreprints@permissionsgroup.com, call 800-374-7985or 847-635-6550, send a fax to 847-635-6968, or write to ThePermissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL60025, USA.
Apr. 19--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."
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