Companies cook the books to meet tough targets: Survey

Cooking the book is not a niche skill-set of S-Chip's accountant, but a well-demanded skill-set world-wide

Companies cook the books to meet tough targets: Survey

LONDON — Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young (E&Y) said in its latest Fraud Survey published yesterday.

One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.

http://www.todayonline.com/business/comp...ets-survey

I am not surprised. i may be surprised if the cooking is overdone (Breaking the law). There are a lot of "grey areas" which an accountant worth his salt can manipulate due to accrual accounting. That's one of the reason i am quite wary of AR. As i think it's not easy to spot the "RED FLAG" even at times by professional analysts.

exactly when a company has a huge portion of its cash flow tied up in A/R, it is surely a starting sign for concern.

Then over time, they tell you that some of the A/R has gone bad, etc

(07-05-2013, 01:48 PM)Temperament Wrote: I am not surprised. i may be surprised if the cooking is overdone (Breaking the law). There are a lot of "grey areas" which an accountant worth his salt can manipulate due to accrual accounting. That's one of the reason i am quite wary of AR. As i think it's not easy to spot the "RED FLAG" even at times by professional analysts.

(07-05-2013, 09:46 PM)Stockerman Wrote: exactly when a company has a huge portion of its cash flow tied up in A/R, it is surely a starting sign for concern.

Then over time, they tell you that some of the A/R has gone bad, etc

(07-05-2013, 01:48 PM)Temperament Wrote: I am not surprised. i may be surprised if the cooking is overdone (Breaking the law). There are a lot of "grey areas" which an accountant worth his salt can manipulate due to accrual accounting. That's one of the reason i am quite wary of AR. As i think it's not easy to spot the "RED FLAG" even at times by professional analysts.

Sorry. Is your A/R also mean Annual Report?

i think the worst case is AR shows they have plenty of cash to cash equivalent somewhere in the banks, trade receivables, etc. How can we be sure off? How to be sure of all these excess cash? They can fake it for at least 1 to 3 years. They can even use your capital or equity or bank loan to pay you dividends for 1 to 3 years. Can anyone share how to spot it in AR before it burst into the open for everyone to know?
Has anyone any experience of plenty of cash in the company's syndrome?
i had. By the time i "suspected" it and closed my stock position, i had lost about >30K. I am thankful i save at least 50% of my capital. (i admit it's my fault i KK. or was greedy at that time)
Shalom.
Amen.

(08-05-2013, 10:28 AM)Temperament Wrote: i think the worst case is AR shows they have plenty of cash to cash equivalent somewhere in the banks, trade receivables, etc. How can we be sure off? How to be sure of all these excess cash? They can fake it for at least 1 to 3 years. They can even use your capital or equity or bank loan to pay you dividends for 1 to 3 years. Can anyone share how to spot it in AR before it burst into the open for everyone to know?
Has anyone any experience of plenty of cash in the company's syndrome?
i had. By the time i "suspected" it and closed my stock position, i had lost about >30K. I am thankful i save at least 50% of my capital. (i admit it's my fault i KK. or was greedy at that time)
Shalom.
Amen.

Well, actually there is. here is what to look for:

1. High cash, low dividend
2.High cash, high debt
3.extremely low deposit rate for cash(I think this is dead giveaway)

(08-05-2013, 10:45 AM)Jacmar Wrote:

(08-05-2013, 10:28 AM)Temperament Wrote: i think the worst case is AR shows they have plenty of cash to cash equivalent somewhere in the banks, trade receivables, etc. How can we be sure off? How to be sure of all these excess cash? They can fake it for at least 1 to 3 years. They can even use your capital or equity or bank loan to pay you dividends for 1 to 3 years. Can anyone share how to spot it in AR before it burst into the open for everyone to know?
Has anyone any experience of plenty of cash in the company's syndrome?
i had. By the time i "suspected" it and closed my stock position, i had lost about >30K. I am thankful i save at least 50% of my capital. (i admit it's my fault i KK. or was greedy at that time)
Shalom.
Amen.

Well, actually there is. here is what to look for:

1. High cash, low dividend
2.High cash, high debt
3.extremely low deposit rate for cash(I think this is dead giveaway)

1 and 2, the company managed masking for sometimes. It was for about 1 to 2 years.
Sorry! Can you elaborate 3?
Thanks

I think this is happening in our S-Chips, like what has happened in the past.

Best example was Oceanus, as the growth in abalone size allowed them to book organic gains which relates to higher earnings

thus they report stronger and stronger earnings year after year

when the books gets overcooked the worms finally comes out and Oceanus reports a big loss as many of their Abalones suddenly "died"

LOL

waiting for the next episode of S-Chips ^^

(08-05-2013, 11:50 AM)felixleong Wrote: I think this is happening in our S-Chips, like what has happened in the past.

Best example was Oceanus, as the growth in abalone size allowed them to book organic gains which relates to higher earnings

thus they report stronger and stronger earnings year after year

when the books gets overcooked the worms finally comes out and Oceanus reports a big loss as many of their Abalones suddenly "died"

LOL

waiting for the next episode of S-Chips ^^

Exactly! One of the S-Chips. Which was once "approved" by our great DBS too. So how can a bank got con too? So easy meh? I know there are many, many more S-CHIPS.

(08-05-2013, 10:57 AM)Temperament Wrote:

(08-05-2013, 10:45 AM)Jacmar Wrote:

(08-05-2013, 10:28 AM)Temperament Wrote: i think the worst case is AR shows they have plenty of cash to cash equivalent somewhere in the banks, trade receivables, etc. How can we be sure off? How to be sure of all these excess cash? They can fake it for at least 1 to 3 years. They can even use your capital or equity or bank loan to pay you dividends for 1 to 3 years. Can anyone share how to spot it in AR before it burst into the open for everyone to know?
Has anyone any experience of plenty of cash in the company's syndrome?
i had. By the time i "suspected" it and closed my stock position, i had lost about >30K. I am thankful i save at least 50% of my capital. (i admit it's my fault i KK. or was greedy at that time)
Shalom.
Amen.

Well, actually there is. here is what to look for:

1. High cash, low dividend
2.High cash, high debt
3.extremely low deposit rate for cash(I think this is dead giveaway)

1 and 2, the company managed masking for sometimes. It was for about 1 to 2 years.
Sorry! Can you elaborate 3?
Thanks

Shall quote from muddy water's report on olam

Quote:in Q3 2010, Olam recorded S$1.6 million in interest income on the income statement, and then recorded negative S$11.7 million in interest income received on the statement of cash flows. In Q4 2011, Olam reported no interest income on the income statement or statement of cash flows, despite reporting an average cash balance of
S$818.1 million for the quarter.

for the third method, either the interest rate paid is too low or the cash move up but interest stay around the same.

(08-05-2013, 09:04 PM)shanrui_91 Wrote:

(08-05-2013, 10:57 AM)Temperament Wrote:

(08-05-2013, 10:45 AM)Jacmar Wrote:

(08-05-2013, 10:28 AM)Temperament Wrote: i think the worst case is AR shows they have plenty of cash to cash equivalent somewhere in the banks, trade receivables, etc. How can we be sure off? How to be sure of all these excess cash? They can fake it for at least 1 to 3 years. They can even use your capital or equity or bank loan to pay you dividends for 1 to 3 years. Can anyone share how to spot it in AR before it burst into the open for everyone to know?
Has anyone any experience of plenty of cash in the company's syndrome?
i had. By the time i "suspected" it and closed my stock position, i had lost about >30K. I am thankful i save at least 50% of my capital. (i admit it's my fault i KK. or was greedy at that time)
Shalom.
Amen.

Well, actually there is. here is what to look for:

1. High cash, low dividend
2.High cash, high debt
3.extremely low deposit rate for cash(I think this is dead giveaway)

1 and 2, the company managed masking for sometimes. It was for about 1 to 2 years.
Sorry! Can you elaborate 3?
Thanks

Shall quote from muddy water's report on olam

Quote:in Q3 2010, Olam recorded S$1.6 million in interest income on the income statement, and then recorded negative S$11.7 million in interest income received on the statement of cash flows. In Q4 2011, Olam reported no interest income on the income statement or statement of cash flows, despite reporting an average cash balance of
S$818.1 million for the quarter.

for the third method, either the interest rate paid is too low or the cash move up but interest stay around the same.

Hmm... (Must be damn alert not just read through only).

Really must piece the whole picture together. Or must somehow know what to look for piece by piece and see whether the whole picture look right or not. Like trying to piece a Jigsaw puzzle together to see the whole picture look correct or not? Or during the process of piecing together you found out some pieces don't belong here at all. No joke! Very difficult leh! Good example.
Thanks!