Home' A Plus Magazine : September 2013 Contents 12 September 2013
Audit of government debt
is credit positive: Moody’s
China’s audit of government-related debt ob-
ligations is credit positive, as it will improve
the limited transparency of the amount of lo-
cal government debt, a report by the Moody’s
credit-rating agency showed last month. How-
ever, Moody’s warned that thorough account-
ing might reveal that local governments carry
debt that is beyond previous estimates. The
National Audit Office announced a nation-
wide audit of government-related debt in July.
Hollywood studios strike
tax deal with Mainland
The Motion Picture Association of America re-
solved a dispute with the Chinese government
last month over a 2 percent value-added tax
that held up payment owed to Hollywood stu-
dios for foreign films distributed in China. State-
owned distributor China Film Group insisted
that studios pay the value-added tax out of
their share of Chinese box-office revenues. Stu-
dios were reportedly owed between US$150
million and US$200 million. MPA A chairman
Chris Dodd said payments have resumed.
Macau gambling group
sees first-half profits soar
Macau casino SJM Holdings posted a 12 per-
cent increase in net profit in the first half of
this year following strong demand from gam-
blers despite slowing growth in China. SJM’s
net profit for the January-June period totalled
HK$3.8 billion, compared with HK$3.4 billion
a year earlier. The figure was slightly better
than an average forecast of HK$3.6 billion, ac-
cording to Thomson Reuters Eikon data.
inaugural UN peace prize
Liu Jiayi, China’s auditor-general, received a
United Nations Peace Prize in recognition of
his auditing work for UN peacekeeping op-
erations. Ameerah Huq, head of the UN’s de-
partment of field support, who presented Liu
with the prize in New York on 24 July, praised
Liu and China’s National Audit Office, which
he heads, for their efforts in helping to main-
tain world peace.
Sinovel Wind Group, the largest turbine manufacturer in China, outlined last
month new measures to prevent future accounting problems. This follows the
disclosure earlier this year of the company inflating earnings and revenue figures.
In a filing on 2 August, the wind-energy company announced the details of
new procedures, including more frequent inventor y checks, on-site inter views
and inspections, better training for middle managers and enhanced document
verification, The Wall Street Journal reported.
The company also said that it had appointed an executive in its financial plan-
ning department to the new post of chief auditor.
In April, Sinovel revealed that it mistakenly recognized revenue in 2011 from
uncompleted projects and overstated its profits by 20 percent. The company said
it discovered the errors after “self-examination” and would restate its 2011 and
2012 financial statements.
The company also announced in May that it was under investigation by the
China Securities Regulator y Commission into alleged securities violations.
Sinovel, once the world’s second-largest supplier of wind turbines, reported
a net loss of 583 million yuan last year compared with a net profit of 598 million
yuan in 2011.
Turbine manufacturer sets rules
to fend off accounting errors
CSRC to strengthen steps to
tackle market malpractices
Regulator warns of harsher penalties
The Mainland securities regulator vowed last month to strengthen law enforce-
ment and impose harsher penalties for capital markets fraud. It comes amid an
increase in reported financial crimes this year involving management of public
companies, brokerages and financial institutions.
Xiao Gang, chairman of the China Securities Regulatory Commission, vowed
in an article published in a Communist Party-run publication to establish “proac-
tive” steps to address deficiencies in the capital markets.
“Lowering market entry requirements and strengthening law enforcement is
the ‘inflection point’ in the transformation of China’s capital market super vision,”
Xiao wrote. He said penalties for malpractice will increase and larger incentives
will be offered to whistle-blowers.
In a sign of the commission’s tightened super vision, it was reported last month
that the commission penalized 120 listed companies for v iolating regulations this
year, compared with 96 in 2012. The violations included those related to fraud,
insider trading and noncompliance with information disclosure regulations.
According to the Global Times, the CSRC launched investigations into more
than 30 listed companies and securities and fund firms so far this year.
Last year, cases of capital market crimes, with some including insider trading,
grew 21 percent year-on-year, and cases were up 40 percent year-on-year in the
first half of 2013, reported China Daily.
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