Presentation on Environmental Audit

Fraud Findings Outline

Fictitious Revenue/Sales Improper Asset Valuation

Legal Requirements
Should Audit Report be Written? What to Look for in an Environmental

Management Audit?
Benefits of Regular Audit

Fictitious Sales/Revenue Sales Increase Receivables decrease No Provision and Bad debts Cash Decrease Cash Flows From Operating Activities Negative GMI Higher than nonmanipulator index but slightly lower from manipulator index Days on inventory almost 5 months which showing slow in selling activities

Improper Asset Valuation Cash Flows From Operating Activities Negative Inventory Turnover Increase Not provide write off Lengthy on Days in Receivables 227 days on 2011 and 249 on 2010 Intangible assets may derived from estimate figure due to suddenly appear in 2011

Concealed Liabilities And Expenses Understating liabilities and expenses is one of the ways financial statements can be manipulated.
When liabilities are concealed, equity, assets, and/or net earnings are inflated.

Concealed Liabilities And Expenses Red Flags 1

Recurring negative cash flows from operations or an inability to generate cash flows from operations while reporting earnings and earnings growth. Can you find this at HoyongHayang Financial Statement???
Cash Flows From Operating Activities Negative for Two consecutive years 2010-2011

Concealed Liabilities And Expenses

Red Flags 1 Why the Cash Flows From Operating Activities Negative for Two consecutive years 2010-2011 while your sales revenue having a good growth and surprisingly the cash and bank balance decreased by 27.54%????

Concealed Liabilities And Expenses

Red Flags 1 HoyongHayang is suspected made a fictitious sales revenue which is to proof that our first finding is correct

Concealed Liabilities And Expenses Red Flags 2 Assets, liabilities, revenues, or expenses based on significant estimates that involve subjective Judgments or uncertainties that are difficult to corroborate.

So what about with this???

Figure from Intangible asset amounted RM7,279,000 may derived base on estimation figure due to suddenly appear in 2011 even worse it suppose to be recorded under expenses (Suspected Capitalizing The Expenses)

Concealed Liabilities And Expenses

Red Flags 2 So what if this transaction recorded under the expenses??? HoyongHayang will suffer another major losses as per 2008 and even worse after made fictitious sales revenue they still couldnt make a profit

Recurring negative cash flows from operations or an inability to generate cash flows from operations while reporting earnings and earnings growth.

Improper Disclosure On Unusual Activities Advances to log supplier suppose to be recorded on current asset instead of non current asset Reason may be to avoid current ratio result goes to extremely high. CR 2011 is 3.33 and it may go to 4.24

Timing Differences Early recognition on sales/revenue on year 2010 Slightly increase in trade receivable for year 2009 to 2010