HA NOI (VNS)— Prolonged economic hardship this year has enticed many listed companies to embellish their financial statements.
Together with numerous violations related to information disclosure, the latest discovery raises an alarm about the lack of transparency in the corporate sphere.
According to Ho Thi Ngoc Ha, deputy director of the Ministry of Finance's Accounting and Auditing Department, the accounting standards are not simple to interpret, so errors are to some degree unavoidable. However, the quality of financial reports this year has declined substantially compared to previous years.
"Just glancing at those financial statements, we saw gaping errors," Ha said. "Many used a reporting method that did not at all comply with accounting standards."
She said the economic crisis had made companies' inventories and bad debts soar, yet the financial statements of most listed companies this year have not made provisions for such inventories or bad debts.
"There are some companies hiring 2-3 auditing companies to audit their financial statements at the same time and choosing the better audit report to make public, Ha added.
Bui Hong Hai, deputy director of the State Securities Commission's Issuance Management Department, said errors occurred across the balance sheet, from failing to make provisions for losses to accurately depicting business performance and cash flow.
Notes to the financial statements often failed to meet accounting standards, the director noted.
"This year, the State Securities Commission has asked 20 listed companies to explain and supplement the notes to their financial statements, which concern related parties, potential assets and outstanding liabilities," Hai said.
Following the Law on Independent Audit, which takes effect this year, public companies including listed companies, securities companies, insurance companies and financial institutions must set up internal control and audit divisions in order to enhance the quality of companies' performance.— VNS