RedTone's Deviation in its accounts

I find it so rather intriguing.

Posted on the Edge Weekly:

• 8 Oct 2007: Corporate: REDtone's numbers in Pakistan don't tally
  By Cindy Yeap
  
  REDtone International Bhd, already late in finalising its accounts for the financial year ended May 31, 2007, needs another week to close its books. The company in an announcement last Friday said the delay was because it could not finalise audited accounts for its subsidiary in Pakistan.
  
  A source says a part of the problem could be due to REDtone only recently managing to find a replacement for its accounts manager in Pakistan "after several months". But essentially, auditors are having problems tallying numbers in Pakistan due to discrepancies in entries in its books involving foreign exchange (forex) rates, the source says.
  
  "The numbers (entries) do not agree (tally) because of the difference in the exchange rates for Pakistani rupee to the US dollar and the Malaysian ringgit. And the ringgit has been appreciating against the dollar, but the Pakistani rupee has weakened. There's some complication because some of these complex forex entries are done manually (not computerised)," the source adds. Payments to suppliers, for instance, are made in US dollars.
  
  There are also some issues with the recording of sales from its "call back" telephony service. Nonetheless, it is understood that the company does not suspect any "foul play" taking place at the moment.
  
  Whether or not one accepts the explanation of complications in forex computations, it is clear that there is a problem with its business processes. And it seems to be a problem that only just arose because REDtone had never been late in submitting its accounts. The company will need to assure investors that the issue will be fixed fast. ( Click here for the rest of the article: 8 Oct 2007: Corporate: REDtone's numbers in Pakistan don't tally )

The very next day..

• 09-10-2007: MD: No fraud in REDtone accounts
  by Ellina Badri
  
  PETALING JAYA: REDtone International Bhd’s delay in submitting its annual accounts for the financial year ended May 31, 2007 was not due to fraud or wrongdoing in finalising its accounts for that year, its group managing director Wei Chuan Beng said.
  
  He told The Edge Financial Daily yesterday that it took some time to finalise the accounts as it had to “re-do” accounting entries of its subsidiary in Pakistan due to the difference in the exchange rates of the Pakistani rupee to the US dollar and the ringgit.
  
  He said the accounts were now being finalised and REDtone’s auditors would present the report to the company in the next two days, to be announced to Bursa Malaysia this Friday.
  
  The Edge weekly, in its latest issue, had reported that REDtone had yet to submit its FY07 audited accounts since missing Bursa Malaysia’s initial Sept 30, 2007 deadline.
  
  Asked if the delay reflected on the efficiency of the company’s business processes, Wei said the incident was a “one-off thing” and moving forward, it would look to hedge currency fluctuations on a weekly and monthly basis to avoid this issue recurring in the future.
  
  He added he was confident the accounts would show “very positive progress” in the company’s revenue.
  
  Meanwhile, Wei said the company viewed the current setback separately from its plans to migrate to the Main Board of Bursa Malaysia from the Mesdaq Market.
  
  He said its migration to the Main Board was a shareholders’ matter and the emergence of REDtone’s new Bumiputera shareholders ensured its plans would move forward.
  
  Warisan Jutamas Sdn Bhd, controlled by Mohamed Shah Kadir and Abdul Karim Kadir, had emerged as a substantial shareholder in REDtone with a 10% stake last Friday.
  
  On brokers’ Sell recommendation on REDtone’s stock, Wei said they might not have had current information on the company which had new developments such as in its Bumiputera shareholders, overseas developments and future partnerships.
  
  “The past does not represent the future,” he said.
  
  Its share price closed at 59 sen yesterday, down 2 sen from 61 sen with 779,600 shares done

Ok, no fraud says the MD.

Today...

• 12-10-2007: REDtone announces deviations in accounts
  by Sharmila Ganapathy
  
  KUALA LUMPUR: REDtone International Bhd yesterday announced deviations in its results for the financial year ended May 31, 2007 with a 45% difference between the audited and unaudited group net profits.
  
  The company said the audited group net profit for FY07 was RM4.9 million compared with RM8.98 million for the unaudited figures.
  
  It said the deviations originated from profits after taxes, where audited results totalled RM5.6 million against the unaudited RM10.5 million. The RM4.96 million difference, said REDtone, was due to unrealised net foreign exchange losses on an inter-company loan (RM2.98 million) and unrealised net foreign exchange losses on trade receivables (RM1.13 million).
  
  Other deviations making up the RM4.96 million were RM2.48 million worth of traffic costs associated with committed but unutilised airtime, deferred tax assets from unabsorbed losses and unutilised capital allowances (RM1.86 million), minority interests share of loss (RM897,000) and other items (RM666,000).
  
  The Edge weekly recently reported that REDtone had yet to submit its audited accounts for FY07 after missing its September deadline.
  
  On Monday, REDtone group managing director Wei Chuan Beng said the delay in submitting the annual accounts was not due to fraud or wrong doing in finalising the accounts for that year.
  
  He said it took some time to finalise the accounts as the company had to re-do accounting entries in its subsidiary REDtone Telecommunications Pakistan Pte Ltd due to the difference in the exchange rates of the Pakistani rupee to the US dollar and the ringgit.

A deviation of 45%?!!!

WOW!

So tell me... wazzup man!