Procomp accountants will be punished

After a two-week-long investigation, the Financial Supervisory Commission yesterday decided to impose administrative penalties on accountants for their negligence in certifying the now bankrupt Procomp Informatics Ltd's (博達科技) financial documents.

The commission decided to punish accountants from Deloitte Touche Tohmatsu (DTT, 勤業眾信) and KPMG Certified Public Accountants (安侯會計師事務所) by suspending their right to certify listed companies' financial reports for a period of two years beginning from next month.

In accordance with Article 39 of the Securities Transaction Law (證券交易法), Lee Cheng-ming (李振銘) and Wang Ching-shan (王金山) from DTT, and Tsai Tien-yuan (蔡添源) and Yu Wan-yuan (游萬淵) from KPMG will be subject to the punishment, commission member Lu Tung-ying (呂東英) told a press conference yesterday.

Procomp surprised investors by defaulting on corporate bonds worth NT$2.98 billion in the middle of last month under circumstances which gave rise to allegations of fraud. The company filed a restructuring plan at court ahead of the default.

Lu said that the commission ruled that DTT accountants had failed to carefully double check other documents before giving their approval to the accuracy of Procomp's financial reports last year, including its bank savings, assets and subsidiaries' investment balances.

The commission also ruled that KPMG accountants had failed to carefully double check other documents before giving approval to the accuracy of Procomp's financial reports in 2000 and 2002, including its foreign-currency savings and sales amounts by Procomp's five agents.

"All of them failed to fulfill their professional obligations," Lu said, adding that the penalties are the most severe ever imposed on local accountants.

"They may be first offenders, but their negligence has had a very negative impact on the stock market," he said.

The Securities Transaction Law's Article 39 stipulates that violators will be given a minimum business suspension of two months to a maximum of two years.

Lu expressed hope that lessons can be learned from the Procomp incident to make sure all accountants fulfill their duties in accurately certifying listed companies' financial portfolios.

Should investigators find that the accountants are also involved in Procomp's financial irregularities, they may later face criminal charges or compensation claims from stock investors, Lu said.

He also said the commission is still looking into other financial details about deals made abroad.