Please ensure Javascript is enabled for purposes of website accessibility
February 6, 2023

Chinese Company Wraps Themselves in the Security Blanket That Is an Unqualified Audit Opinion From PwC

You may have noticed that a number of Chinese companies have had some issues with their accounting. This typically leads to the company’s auditor quitting, the CFO resigning, an SEC filing explaining all of it and then the revelation of some embarrassing details to accompany it all. Like a video of company’s employees sleeping. Or taking audit workpapers hostage. The best part about these stories is that the companies typically go on the defensive, and some make claims about their prestigious auditors just moments before the shit hits the fan.

Today we bring you Li & Fung, Ltd., a supply chain manager out of Hong Kong. L&F has reacted to a recent report from UBS that has…wait…yes, called attention to an accounting change and that “the company’s future GAAP earnings might not fully reflect the profitability of operations and that the new revenue recognition policy may distort a declining margin trend.”

Li & Fung has reacted right on cue:

“These statements are misleading,” Company Secretary Terry Wan said in the statement.

“The company has disclosed the relevant accounting policies in note 1.1 of its 2010 accounts, which have been audited by PricewaterhouseCoopers and are in full compliance with the HKFRS (Hong Kong Financial Reporting Standards),” Wan said.

Li & Fung: UBS Report On Firm’s Accounting Policies Not Factually Accurate [Dow Jones]

You may have noticed that a number of Chinese companies have had some issues with their accounting. This typically leads to the company’s auditor quitting, the CFO resigning, an SEC filing explaining all of it and then the revelation of some embarrassing details to accompany it all. Like a video of company’s employees sleeping. Or taking audit workpapers hostage. The best part about these stories is that the companies typically go on the defensive, and some make claims about their prestigious auditors just moments before the shit hits the fan.

Today we bring you Li & Fung, Ltd., a supply chain manager out of Hong Kong. L&F has reacted to a recent report from UBS that has…wait…yes, called attention to an accounting change and that “the company’s future GAAP earnings might not fully reflect the profitability of operations and that the new revenue recognition policy may distort a declining margin trend.”

Li & Fung has reacted right on cue:

“These statements are misleading,” Company Secretary Terry Wan said in the statement.

“The company has disclosed the relevant accounting policies in note 1.1 of its 2010 accounts, which have been audited by PricewaterhouseCoopers and are in full compliance with the HKFRS (Hong Kong Financial Reporting Standards),” Wan said.

Li & Fung: UBS Report On Firm’s Accounting Policies Not Factually Accurate [Dow Jones]

Latest Accounting Jobs--Apply Now:

There are currently no vacancies.

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

a father and son in front of the Martin Luther King Jr. Memorial in Washington, DC

Remembering the Time Everyone at PwC Had to Work on MLK Day As a Noble Gesture to Honor Dr. King

The following message we’re about to share with you was sent out as a firmwide email from then-Chairman Dennis Nally to everyone at PwC almost exactly 15 years ago to the day. To my knowledge it’s never been published here, because back when it went out to everyone working at PwC US in January 2008, […]

No One Cares But Here Are PwC’s 2023 Metaverse Predictions Anyway

What’s next for the metaverse and what — if anything — should you do about it? PwC has answered the question no one is really asking in its 2023 metaverse predictions. These predictions are, as you’d expect, dumb made assuming that businesses and consumers alike will begin using the metaverse in earnest rather than making […]