Print

Mail

wiki links

Accountants called to explain Procomp discrepencies

The Securities and Futures Commission (SFC) yesterday said that it had asked KPMG Certified Public Accountants (安侯會計師事務所) and Deloitte Touche Tohmatsu (DTT, 勤業眾信), to present explanations for anomalies in financially distressed Procomp Informatics Ltd's (博達科技) certified financial portfolios.

"If KPMG and DTT fail to present respectively, today and tomorrow, evidence to clarify their roles in the company's financial scandal, disciplinary action may be taken against them," the SFC's vice chairman Wu Tang-chieh (吳當傑) told a news conference yesterday.

If they are found negligent in certifying Procomp's financial documents, the accounting firms may face penalties as severe as having their licenses revoked or a business suspension in accordance with Article 39 of the Accounting Law (會計法) and Article 37 of the Securities Transaction Law (證券交易法).

The commission will also launch an probe into the role of Citigroup Global Markets Taiwan Ltd, which arranged Procomp's overseas bond sale, to investigate if it violated Article 66 of the Securities Transaction Law.

If it has, similar penalties can be imposed, Wu said.

In mid-June, Procomp unexpectedly filed a restructuring proposal in a local district court and defaulted on a NT$2.98 billion corporate bond payment despite certified financial reports in March showing that the company had NT$6.3 billion worth of financial derivatives in its foreign accounts, which were later frozen for unclear reasons.

After Procomp's chairwoman Sophie Yeh (葉素菲) was detained at the weekend for interrogation on charges of breach of trust and embezzlement, the finance ministry has since been under heavy criticism for failing to spot the company's financial irregularities earlier.

Finance Minister Lin Chuan (林全) yesterday defended the SFC and related government agencies, saying that it was impossible for financial authorities to step into the affair earlier since there were no signs of problematic financial documents at the company until the default.

Lin laid the blame on Procomp's management, which he accused of intentionally covering up its poor financial performance so as not to conceal possible wrongdoing.

"To prevent such a scandal from happening again, the government can only do its best to facilitate a sound legal and regulatory environment," Lin told the same news conference.

Lin said that the government will soon revise laws to reinforce corporate governance principles and accountants' legal responsibilities.

In the proposed corporate governance law currently being drafted, all listed companies will be required to hire independent board members, who shall account for at least one fourth of the makeup of a board of directors while the importance of an auditing committee will be stressed, Lin said.

The law will also stipulate that at least half of the board members must have no family ties or business connections to the management.

Lin said that the ministry will also propose supporting measures to revise the Accounting Law so as to stress the importance of accountants' independence.
This story has been viewed 2146 times.