Baker Tilly audit summary report shows that auditors had factored in Xtron’s status as a going concern and its ability to redeem the Xtron bonds from CHC before signing off on audit accounts.
In defense lawyer Edwin Tong’s cross-examination of prosecution witness Tiang Yii this afternoon, the latter confirmed that whatever appeared in the audited accounts would have had to be to the auditor’s satisfaction and must have met the appropriate accounting standards, even if there might have been negotiations between the client and auditors on what was to go into the accounts.
In a Baker Tilly audit summary report dated Apr 10, 2008, it was stated that although Xtron was in a negative capital position, the financial statement was prepared on a going concern basis as the directors and certain third parties had undertaken to provide financial support, which would be available when needed.
An audit memorandum plan dated Aug 2008 further showed that the Xtron management had given Baker Tilly clear explanation for its financial projection for the 10 year period, showing its ability to redeem the Xtron bonds despite suffering financial losses in recent years.
Tong was seeking to establish that in their assessment of Xtron’s ability to redeem the bonds, Baker Tilly’s auditors did not raise any concern or red flags regarding information put forth by the company.
Additionally, Tiang herself emphasised that the auditors never take the client’s representation at face value, but will check to ensure that management representation is in line with material the auditors have gathered.
Today’s court proceedings built on previous points made in cross-examination by senior counsels N. Sreenivasan, Kenneth Tan and Michael Khoo—that the auditors had received relevant information about the relationships between CHC, AMAC and Xtron Productions Ltd.
Earlier on, Tiang stated that she had never contacted Kong Hee—and did not believe that any member of her audit team had contacted Kong—regarding audits for the financial year 2007 for both CHC and Xtron.
Tiang agreed, that up till date, she had not received information that would cause her to think that the bonds issued by Xtron to CHC were fraudulent, sham or unauthorised in some manner to affect the true and fair view of the accounts—except for what she has read in newspaper reports, to which Tong countered light-heartedly that “that’s the trouble with newspaper reports.”
Cross-examination by senior counsel Kannan Ramesh resumes at 9:30 am tomorrow.