“Charlie (Munger) and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children
”
Accounting & Auditing Shenanigans - I - Auditors withdraw audit report after circulation
Unthinkable has happened - Auditors Withdraw audit report after circulation
The almost unthinkable has happened , just a day before the AGM, Deloitte Haskins & Sells, the auditors of Financial Technologies has withdrawn its audit report for fiscal 2012-13. These results had been released on 30th May and also dispatched to the shareholders.
The auditor citing crises in NSEL held the accounts as unreliable withdrew its report.
This may have been due to the fact that NSEL’s auditor, Mukesh P Shah & Co, has also withdrawn its audit report.
The issue - NSEL, promoted by FTIL, has to settle some 6,000 Crs dues to 148 members/brokers, representing 13,000 investor clients, after its trade was suspended on July 31 by government orders. Investigations have revealed related insiders, missing stocks, frauds & other misuse.
The institute of Chartered Accountants (ICAI) has launched an investigation into the matter which basically means assessing the auditors, their procedures, gaps, overlooking & any related ultra vires etc.
Is it enough ?? remember Satyam - nothing real happened then , hope this time they haul these guys over hot coals.
This raises few pertinent questions –
- are the auditor reports reliable
- Tenure & fees of auditors
- Can the auditors hide behind sample checks
Reliability appears very low & you need to do your own due diligence.
As the public probity increases , the agencies confront white collar crime more often, the role of auditors, validity of their reports have come into question time & again.
Long Tenures , Proximity often comes to play whether its a deliberate issue or sheer over confidence, then Satyam happens !
A sudden jump in auditor fees is another big give away !
Ever greening of loans ( happily used by banks) or amending Accounting standards of ICAI to help companies overcome prudence and capitalise interest costs - Power Projects, point to Govt's debatable example setting.
Solution - Honest & sufficient oversight either by an ICAI wing or some other statutory body, which should look for such interesting variations, ask relevant questions and also red flag Org & Auditors for immediate future.
Severely punishment for the guilty partners & the firms too.
The statement of FTIL on the Auditors' act and other relevant issues is attached for perusal
RBI Moves - Bans 0% loans & Additional Charges on Debit Cards
Today the RBI asked the banks to stop giving zero interest loans normally offered both on high value purchases & on credit card purchases.
They want full disclosure of costs to the customers – another cheating avenue gone
So what are 0% loans really, nothing but a camouflaged marketing gimmick where the costs are routed via inflated processing fees and other charges which are not disclosed upfront while the gullible consumer is happy that he isn’t paying any interest.
FMCG sales before festive seasons will sure be hit.
No Additional charges to be levied on debit card purchases
In another move, the RBI said no additional charges can be levied by merchants on payments for goods by debit cards.
Businesses levy fee as a %age of the transaction value as charges on customers who are making payments for purchase of goods and services through debit cards.
These are unjustified & not permissible as per their agreements with banks.
Guru Speak !
“Unless you can watch your stock holding decline by 50% without becoming panic stricken , you should not be in the stock market !!!”
A brief note of caution on 20% - 80% Housing Loan schemes
All the people investing in 20% / 80% schemes of builders should be aware that the builder has taken his full money from the bank and in event of default you are equally liable viz the bank can come after your assets. More so if the project is incomplete , there is no asset per se except land and a structure kind.
This is a serious issue and should be kept in mind.
Those who want to speculate via this route seem very vulnerable.
Your assets means all assets
If you have a family member jointly signing with you , even all their assets are covered in this ambit !
So If you have to enter into such an arrangement , do it only with the top firms in Reality sector but with knowledge that you are equally & fully involved !
btw - what is top firm these days
ps - this will be more important for people around you with medium income levels trying to get rich quick or board the property train in a big way...in such difficult recessionary times , jobs aren't so certain & secure , vulnerability is much higher..please guide them well & earn some Karma points !!
