Discrepancies in financial reviews
Discrepancies in financial reviews
Many listed companies have announced reviews of their financial statements for the first half of this year; as usual, the review reports reveal a discrepancy between the internal papers and reviews by auditing companies.
A number of companies have seen their losses increase or profits decline after the independent reviews.
The first-half losses of Truong Thanh Furniture Corporation (HOSE: TTF) rose by VND164 billion (US$7 million) to VND732 billion after the audit. After-tax losses of the parent company also added VND124 billion to reach VND685.2 billion.
The strong increase in losses was attributed to a VND12 billion decline in revenue while the capital costs grew by VND180 billion.
The auditor also noted that TTF incurred an accumulated loss of VND2.09 trillion ending June. Its short-term liabilities also surpassed short-term assets by VND101 billion, reflecting considerable uncertainty about the continued operation of the company.
“King of tra fish” Hung Vuong Joint Stock Corporation (HOSE:HVG) also suffered an additional loss of VND115 billion, lifting semi-annual loss from October 1, 2017 to March 31, 2018 to VND377 billion.
Ending the third quarter of the 2018 fiscal year (April 2017-June 2018), its net profit declined to VND13.6 billion, pushing down the nine-month loss to VND366 billion.
After a semi-annual review, profits of Hoang Anh Gia Lai JSC (HOSE:HAG) shrank by VND40 billion to VND100 billion. Shareholders of the parent company incurred a net loss of VND34.5 billion, VND23.5 billion higher than the previous number.
Housing developer An Duong Thao Dien (HOSE:HAR) also saw its after-tax profit decline by 67 per cent after the review. Most accounting items did not change much but its management expenses increased by 44 per cent, leading to a profit drop.
For the case of mineral company An Truong An JSC (HOSE:ATG), the auditor adjusted the company’s profit of over hundreds of million dong to a loss of VND5.7 billion. According to the auditor, ATG had to make an additional provision for VND4.4 billion in bad receivables for My Xuan Mineral and Trading Co Ltd.
The companies suffering lower profits after the review also included Vietinbank (CTG), Licogi (LIC), Dai Chau Group (DCS), construction firms Coma 18 (CIG) and Red River Construction (ICG).
On the other end of spectrum, shareholders of some companies are happy with growth in their companies’ profits, such as DAP-Vinachem (DDV), Hoang Long Corp, PetroVietnam Drilling Mud (PVC), Vietnam Airlines (HVN) and Yeah1 Group (YEG).
According to a representative of Ernst & Young Viet Nam, it is difficult to conclude whether such discrepancies are intentional or unintentional. In practice, some mistakes may be made due to shallow professional knowledge of accountants or ambiguity in legal regulations on accounting standards.
Nguyen Manh Hien, director of An Viet Accounting Co, said that in some cases, companies may employ popular tricks from developed markets to revamp their financial statements, depending on motivation of the company’s leaders.
Errors related to financial reports may be subject to a fine of between VND40 million and VND50 million ($1,700-$2,140) according to Decree No 41/2018/ND-CP. In case of serious damage, it can be charged with criminal offence.
“However, it is not easy to determine the effect of any damage arising from financial reports, so criminal sanctions are rarely applied,” Hien was quoted as saying on the tinnhanhchungkhoan.vn.
