The devil is in the detail

Strict punishments are being called for firms which misreport their earnings.

For example, Lilama 5 Company’s (LO5) audited financial reports revealed that the company earned only an VND453 million ($21,884) after-tax profit in the first six months of 2011, 55 per cent lower than an earlier announced VND1 billion ($48,309).

LO5 is the not the only company to have turned out huge differences between un-audited and audited financial reports.

Vneco Electricity Construction and Investment Company (VES) had a 334 per cent difference with a VND3.8 billion loss, a VND1.14 billion un-audited loss and VND4.95 billion audited loss. 

Underground Works Construction Company (CTN), American Vietnamese Biotech Incorporation (AMV), Construction and Infrastructure Development Company (CID), Thien Truong Power Equipment Investment and Construction (KTT), Do Thanh Technology Corporation (DTT), Networks Infrastructure Services ((NIS), Steel Structure Manufacture (SSM) and Vinas A Luoi Minerals (ALV) also had massive un-audited and audited financial report variations.

According to Vietstock statistics, as of August 22 differences had been found in 57 listed firms’ figures  and the number is expected to rise as only 69 per cent of all listed firms on Ho Chi Minh Stock Exchange released audited financial reports.

Le Dat Chi, head of Ho Chi Minh City Economic University’s Financial Investment section, said financial report differences were common because firms faced no punishments. 

Chi said companies must provide accurate information to enjoy investors’ confidence. “Furthermore, the market regulator should also have solutions and punishments so enterprises will be responsible for their financial reports,” said Chi.     

Mac Quang Huy, Thang Long Securities deputy general director, said  company directors often wanted a “good report” for shareholders for short-term purposes. 

“The best way to overcome the differences in financial reports is for companies to only release audited financial reports, not un-audited ones,” said Huy.