I was just catching up on my reading of some old newspapers after a hectic couple of months when I come across this interesting article.
Sino Techfibre firstly announced that there were some issues pending from its year-end audit. While the management was in the process of arranging with E&Y for an expanded audit review of its operations in China (as informed in newspaper), Sino Techfibre reported that there was an early morning fire at its office premises in Shandong office which destroyed books and financial records. While the office premises were said to be damaged, the remaining production facility in Shandong province remained intact. Of course, the fire is being investigated by local police but the records have been destroyed forever.
Another interesting way to prevent auditor from reviewing financial records was to get the lorry carrying those records STOLEN while the driver was having lunch. This actually happened in 2009 with PwC having issues with verfying cash balances of China Sun Bio-Chem.
Source – Straits Times, April 25, 2011 page B13
China Gaoxian has also appointed PwC to verify cash and bank balances, the underlying sales and purchases and capital expenditures for its two subsidiaries in Zhejiang and Fujian provinces for quarter ended March 31. Luckily, the factory operations in the two respective provinces are still operating for now.
Other S-chips with similar accounting irregularities are Hong Wei Technologies and China Hong-xing.
Source – Business Times, April 22, 2011 page 6