Accounting

KPMG wrist-slap shows auditors are too few to fail

19 Jun 2018

Half the accounting firm’s audits for large companies last year were flawed, the UK watchdog found. Bigger fines and closer scrutiny are reasons to improve. But as long as competition is limited to the “Big Four” it’s hard for clients to switch – or for regulators to get tougher.

Chinese tutor’s short answer will be instructive

15 Jun 2018

Muddy Waters invoked Enron in its fraud accusations against $24 bln Tal Education. Complicated attacks can be hard for outsiders to parse, but corporate responses to bearish investors are often telling. China Internet Financial Services and AMD provide useful case studies.

Samsonite short case piles up Hong Kong’s baggage

24 May 2018

An experienced stock sceptic has laid into the $6 bln luggage-maker’s governance and accounting. It’s a bigger and better-known company than the Chinese minnows typically targeted. For a market relaxing standards to broaden its appeal, Samsonite gives investors more to unpack.

Hadas: WeWork blather is call to rework accounting

16 May 2018

The office-rental outfit’s “community-adjusted EBITDA” is ridiculous, but it gets at a real problem: valuing fast-growing firms. Standard measures would benefit investors more than company-defined ones. Accountants can help – once they learn to deal with the post-factory economy.

Caps not breakups are best cure for Big Four woes

16 May 2018

UK lawmakers suggested forcing auditors to hive off their consulting units. That might prevent conflicts but could make the companies less profitable and competitive. Imposing limits on auditors’ market share is a better way to make the sector more efficient and avoid blowups.

Morgan Stanley has paid off smartly for MUFG

16 May 2018

Propping up the Wall Street stalwart mid-crisis cost Japan’s biggest bank more than $9 bln. Over a decade, MUFG has tripled its money and benefited from a powerful U.S. ally. As so-so annual results show, that’s a welcome offset to the difficulties besetting Japanese banks.

VW’s new boss has $184 bln of low-hanging fruit

26 Apr 2018

CEO Herbert Diess kick-started an overhaul of the carmaker. Cutting jobs will be hard given VW’s union-heavy board. But by slashing the group’s excessive spending on materials like steel, Diess could squeeze suppliers instead. That would make a big difference to its thin margins.

KPMG woes force South Africa to consider Big Three

18 Apr 2018

The audit firm’s future in the country is in doubt after it was sacked by the government – its biggest client – following the second scandal in under a year. Regulators have long worried about losing one of the Big Four global firms. South Africa provides a reluctant test case.

Breakdown: China’s gift to big technology

9 Apr 2018

Beijing has unveiled plans to allow Alibaba and other offshore-listed tech giants to sell stock using depositary receipts. The move should boost their valuations and benefit investors on both sides of the Pacific – but creates a few fresh headaches too.

IPO flop adds urgency to Indian bank’s turmoil

4 Apr 2018

ICICI Bank’s brokerage arm plunged on its market debut. A high price and volatile markets played a role, but the $27 bln parent isn’t doing enough to resolve a conflict-of-interest scandal. An independent probe would reassure investors more than soothing words from the board.

Chinese banks healthy enough for stronger medicine

28 Mar 2018

Stable real estate and solid corporate profits helped boost annual earnings at AgBank, CCB, ICBC and others. Manic asset growth slowed and risk buffers thickened. The way is clear for reformers to tolerate more defaults and address flaws in China’s debt-for-equity swap programme.

AIA’s warchest is good omen for investors

27 Feb 2018

After a 28 pct surge in new business last year, the Asian life insurer is sitting on a cool $12 bln. It is hard to see all of that being consumed by modest M&A or investments in growth. That means before long shareholders should be in line for a big special dividend or buyback.

General Electric brings more bad things to light

26 Feb 2018

The $125 bln conglomerate keeps finding skeletons in its closets. A $4.2 bln charge to better account for service contracts was expected; less so are revelations GE Capital inflated its earnings. CEO John Flannery’s overdue cleanup is exposing flaws throughout the weakened giant.

McKinsey’s next leader inherits a big project

26 Feb 2018

Kevin Sneader has been chosen to run the elite consultancy. He’s a traditional-looking candidate but a stint in Asia suggests growth markets are a priority. The challenge is to keep digital reinvention on track and avoid embarrassments like that recently suffered in South Africa.

Steinhoff reminds creditors they are not all equal

1 Feb 2018

The scandal-hit retailer is planning early repayment of a $1.3 bln South African bond in return for releasing funds to cash-strapped European brands. Other mainly international creditors will be asked for waivers. It’s an early indicator of the unofficial pecking order.

Wall Street owes Steinhoff a billion thanks

17 Jan 2018

The South African retailer’s woes forced Citi and three peers to take hits totaling more than $1 bln. The pain is manageable. Like the collapse of UK builder Carillion, though, the episode offers a chance to review risks before a broader downturn brings more red ink - and faces.

Saving Carillion will cost banks and investors

9 Jan 2018

The troubled building services group is due to meet creditors to lay out a plan to avoid financial doom. That will require it to write off almost half its 925 mln pounds of debt. Though shareholders may put up some cash, banks will be forced to take the biggest hit.

Hadas: Albanian mania is cautionary crypto tale

28 Dec 2017

Back in 1996, the Balkan state went wild for investment funds offering 30 percent monthly returns. The final cost was 2,000 lives and five years of lost GDP growth. Bitcoin’s 24 percent monthly gains in 2017 show similar foolishness, but a quick collapse could limit the harm.

Trump tax cut is sack of coal for foreign banks

29 Dec 2017

The U.S. president says reduced corporate taxes are a Christmas present. But a levy on interest payments to overseas companies could hit lenders with U.S. subsidiaries. The provision, the base erosion and anti-abuse tax, might even cancel out the benefit of a lower headline rate.

Steinhoff meltdown has silver lining for hedgies

20 Dec 2017

The S. African retailer’s bonds collapsed amid an accounting mess. But investors are not suffering equally. Steinhoff's fondness for convertibles means more of them are now being sold, pushing them to lower prices than potentially riskier paper. Nimble traders can take advantage.