Beauty China auditors troubled by trade receivables

Beauty China's joint auditors Grant Thornton and HLB Hodgson Impey Cheng steered clear of expressing an opinion on the group's financial statements for the year ended Dec 31, 2008, after they were unable to verify the recoverability of outstanding trade receivables and found significant uncertainties facing its going-concern status. 'The significant uncertainties relating to whether the going-concern basis is appropriate are so extreme that we have disclaimed our opinion,' the joint auditors said. Beauty China has outstanding trade receivables of HK$85.04 million (S$15.96 million), on which the auditors were unable to obtain sufficient evidence to assess whether they could be recovered in full or to determine the amount of impairment needed. Any adjustment would have an impact on the net assets of the group as at Dec 31, 2008 and its fiscal year net loss, and related disclosures in the consolidated financial statements. The group's net trade receivables of about HK$111.48 million as at Dec 31, 2008 was pared down to HK$85.04 million after some settlement since the balance sheet date. And repayment agreements were said to have been entered into between the company and the customers.

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