Wednesday, October 05, 2011

Special Audit To Be Carried Out On Xian Leng!

Yet another stock hitting the headlines for the wrong reason.

  • Xian Leng to conduct special audit

    Published: 2011/10/05

    Xian Leng Holdings Bhd said there might be some financial irregularities involving some RM17.36 million in capital expenditure.

    The company plans to hire an independent party to carry out a special audit.

    The amount is significant because for the past two financial years, Xian Leng's group revenue came in just under RM20 million.

    Xian Leng has suffered three straight years of losses. For the second quarter of the current financial year ending January 31 2012, it posted a net loss of RM1.3 million, up from RM1.21 million in the same period a year ago.
Special audit is now required to check on Xian Leng's rm17.36 capital expenditure.

Hmmm.... well this is one area to be cautious. For example, money spend on capital expenditure could be overstated. Or remember the case of Megan Media where millions were borrowed and spend on new plants and machinery. Upon audit the plants and machinery were no where to be seen!

Now I am not saying this is what's happening in Xian Leng, in fact I simply have no idea what's happening but I am certainly anxious to discover what happens next.

Oh yeah, we had seen recently that many companies had spend millions and millions on capital expenditure. Perhaps the prudent investor should be cautious against such companies who have the nasty habit of making millions and millions in capital expenditures each year.


kine said...

It seem that the this current BIG 3 auditor did not do their work properly & might have to hire another specialist auditor to do the same jobs. Hmm! things getting very interesting here. This well known auditor did not have any special expertise to do their job properly . Probably their main reason will be their job scope of requirement does not require them to detect any fraud in the system. Why shareholders should paid a very high audit fees for any redundant works here ?

Avatar said...

Looks like it's time for the shareholders to run ASAP. BTW this type of information is disseminated, things are probably at an extremely critical stage.

As to the auditors, it's not that easy to detect fraudulent accounting, if any. Still, this depends on a case-by-case analysis and hopefully we can find out more later.

Unfortunately, usually all the findings by the specialist auditors are kept P&C for some reason. Correct me if I'm wrong, Moolah.

Moolah said...

I would agree with you that from a 'normal investor' perspective that there are many, many information not available.

Yes.. investing is rather risky.

Moolah said...

Since when does cow likes carrots?


yeah.. yeah.. yeah... getting stale.

A stale cow... err ... that sounds really awful, no?