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Profit decreases after auditing, why?   2009-03-31 - SGTT

Many listed companies have had to lower their 2008 profit levels at the insistence of auditing firms, to the surprise of shareholders.


Profit lowered, why?


Before auditing, Sacombank banking group announced the pre-tax profit of VND1,243bil. However, after PricewaterhouseCooppers’ auditing, the bank’s profit decreased to VND1,110bil, or VND133bil lower.


The 2008 pre-tax profit of Khanh Hoi Import-Export Joint Stock Company (KHA) has also decreased from VND56.96bil to VND50.65bil, and post-tax profit from VND46bil to VND38.4bil.


The post-tax profit of Ben Tre Seafood Company (ABT) after auditing was VND18.9bil less.


Listed companies’ profit levels have been lowered because auditing firms have asked them to make higher provisions for financial investments.


Sacombank said that there are differences in the methods of making provisions for financial investments applied by Sacombank and PricewaterhouseCoopers.


Unclear regulations?


Listed companies now refer to Circular No 13 regarding provisions for financial investments. However, lack of clarity has led them to different understandings.


SHC, which cited Circular NO 13, said that it does not have to make a provision for its investment in Au Viet securities because the circular says there is no need to make provisions for securities which cannot be traded liberally on the market. Meanwhile, AC&C, the company’s auditing firm, says that as Au Viet lost money in 2008, SHC needs to make provisions for the investment.


Also because of different understandings, several auditing firms do not require high provisions for several companies. Kinh Do Group (KDC), for example, made the provision of only VND26.8bil for financial investments in 2008, while the group had VND580bil worth of short-term financial investments and VND900bil worth of long-term investments.


Le Dat Chi, a senior expert, said that more and more enterprises will have to lower their profit levels for 2008 after their financial reports are audited.

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