Foong Daw Ching’s last day on the stand shed light on the recommended accounting practice for charities which acknowledges that not all investments made by a charity is for maximizing profits, but to meet the charities’ goals.
The final afternoon of the second tranche of the City Harvest trial was a tension-filled one for all in the courtroom. Foong Daw Ching, the partner of Baker Tilly TFW LLP had been on the stand for six days and there was talk of an extension.
But after a meeting in chambers with Senior District Judge See Kee Oon, who presides over the trial, both the defense team and the prosecution agreed to complete cross-examination and re-examination of Foong before the third tranche, slated for January 2014.
Andre Maniam, senior counsel for Serina Wee, presented, as his piece de resistance, the RAP 6 (Recommended Accounting Practice for Charities), a manual for charities, including churches like CHC which fall into the category.
According to GL42.1 in the RAP 6, “Programme related investments (also known as social investments) are made directly in pursuit of the organisation’s charitable purposes. Although they can generate some financial return, the primary motivation for making them is not financial.”
“Churches which are charities have charitable objectives and they also have religious or spiritual objectives, right?” Maniam asked Foong.
Foong answered, “Churches would have, certainly, yes.”
“And it is quite legitimate for a charity to make investments in pursuit of its charitable purposes, where the primary motivation is not financial, right?”
When Maniam put forth a hypothetical situation in which a church, when presented with two alternative investments—the first an investment in a casino offering a five percent interest and the other an investment in a Christian business in line with the church's vision, offering only four percent—Foong emphatically said that it was “absolutely not wrong” for the church to choose the Christian business, even if it offered a lower return.
Maniam also took the court through accounting entries in the church’s consolidated accounts for 2002, noting that no deferred expenditures were captured in the accounts of CHC. These deferred expenditures, which represented costs incurred in the production of new music albums, were instead captured in the accounts of Attributes Pte Ltd, the church’s subsidiary.
Foong agreed that this formed the basis of his claim in the video statement shown in CHC’s extraordinary general meeting on Apr. 27, 2003—that no church funds were used in Sun Ho’s singing career.
Foong also agreed that since 2006, he had been aware of the church’s concern about disclosure of its link with Xtron. He acknowledged that it was natural for CHC to approach him with their concerns, given their long-term personal and professional relationship even though he was no longer its engagement partner on its audit.
Maniam also brought up an email his client, Serina Wee had sent to Baker Tilly to ask CHC’s auditors about “mandatory disclosure” and if it could be minimal, Foong confirmed that there was nothing wrong with the query. He told the court that it was fairly common a question not just from CHC and Xtron but from his other audit clients as well.
The second tranche of the CHC trial concluded with a short re-examination of Foong by deputy public prosecutor Mavis Chionh clarifying a number of finer points that had been raised by the defense during cross-examination.
Foong met with several of the accused outside the courtroom after court was adjourned. “We’re old friends,” said Kong Hee to Foong over and over again, as hugs were exchanged.
The third tranche of the CHC trial is scheduled for January 2014.