The Company is listed on the Catalist market. The Company failed to disclose the acquisition of a significant land parcel in Suzhou costing RMB1.9bil (S$404mil) until queried by SGX. This represented 434% of the Group’s net asset value as at 31 March 2008.
The Company failed to disclose the payment of RMB34.4mil as deposit until queried by SGX. This represented 6.3% of the Group’s market cap as at 4 Feb 2008 – the date of payment of the deposit.
Violation of Rule 730 of the SGX listing manual which requires immediate announcements for transactions exceeding 5% of the Group’s net asset value, net profit or market capitalisation.
Internal control weaknesses relating to board approval and payment procedures
Considerations by Auditors:
~ Audit of internal controls not rigorous enough, in particular relating to board approval and payment procedures?
~ Review of material contracts and agreements not done properly and hence failed to detect the acquisition of the land and forays into property development?
~ Did the auditors apply sufficient professional skepticsm? – i.e did they question the nature of the RMB34.4 mil (approx S$7mil) deposit?
~ Did the auditors exercise Professional Competence and Due Care as required by Section 130 in the Code of Professional Conduct and Ethics?