THE chief executive and executive director of Miyoshi, Andrew Sin Kwong Wah, has been fined S$22,400 for failing to recognise an impairment loss in its financial statements for the fiscal year ended Aug 31, 2019.
The S$16 million impairment loss came from a decline in the value of the company’s equity investment in Core Power (Fujian) New Energy Automobile, said the Accounting and Corporate Regulatory Authority (Acra) on Friday (Jan 10).
The accounting irregularity came to light after the group’s audited financial statements were selected for review by Acra in September 2021, as part of the authority’s financial reporting surveillance programme.
The national regulator found that Miyoshi, which makes metal components, had engaged an independent valuer to assess if the equity investment was impaired.
Despite the valuer’s final report confirming a significant impairment, the Catalist-listed company did not recognise the impairment loss and overstated its net asset value by the same amount, the authority added.
As a result, the group’s FY2019 financial statements were “materially misstated” and provided an “inaccurate picture” of its financial health.
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If it recognised the loss in its earnings report, the group’s loss before income tax would have widened to S$16.8 million, and its total assets would have been fallen 19 per cent to about S$67.9 million.
“Directors have a fundamental duty to provide accurate and reliable financial information,” said Acra.
It added: “Acra will not hesitate to take action against non-compliance with accounting standards. This is to maintain confidence in the credibility and reliability of financial reporting in Singapore.”
Failure to comply with section 201(5) of the Companies Act currently carries a penalty of up to S$250,000. For offences committed on or before Jun 30, 2023, the penalty is a fine of up to S$50,000.
Shares of Miyoshi were trading flat at S$0.004 before the mid-day trading break on Friday. It had called for a trading halt after Acra’s announcement.
