Saturday, March 14, 2009

Singapore Fraud Cases- Fibrechem and Oriental Century

2 Singapore-listed China entities are reported to be involved in fraud scandals recently, namely: Fibrechem Technologies and Oriental Century.

Fibrechem Technologies' auditor, Ernst & Young Singapore have encountered difficulties in the firm final audit of ascertaining the Cash and Trade Debtor balance of the Group. Fibrechem Technologies is a China-based entity involved in producing chemical fibres and synthetic leather.

Whereas, Oriental Century's auditor, KPMG face a similar problem in ensuring the existence of cash and trade debtor balance. Oriental Century is a china-based education company, in which Raffles Education (SGX-listed education Group)holds 29.9% stake with cost of investment amounted to S$34.6mil. In worst case scenario, Raffles Education might have to write- off its investment in Oriental Century if Oriental Centruy could not operate on a going concern basis.

Similarly, in previously reported Satyam Fraud Case in India, Satyam's founder and CEO has mis-appropriated its cash balance in its balance sheet. How could the auditors being mis-led ?

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