Two listed companies caught doctoring records

Two listed companies -- Peoples Leasing and Financial Services and Bangladesh Submarine Cables -- have hid classified loans in their financial reports in a bid to avoid keeping mandatory provisioning against the amount.

The disclosure was made by the Dhaka Stock Exchange (DSE) yesterday by quoting their audit reports.

Peoples Leasing has provisioning shortfall of Tk 151 crore against classified loans and Tk 15 lakh against margin loans, both of which were shown as unclassified in the financial report for the year that ended on December 31, 2017.

The non-bank financial institute has also deferred its interest expense of Tk 156.64 crore and hid it under 'other assets'. But this expenditure cannot be deferred to other assets as per the International Accounting Standards.

The cost value of its subsidiary company PLFS Investments was Tk 20.04 crore. The subsidiary's equity was Tk 18.60 at the year end.
 
As a result, investment was reduced by Tk 1.43 crore, but provisioning against the amount was not made, in violation of the rules.

The leasing company's single borrower exposure exceeds the limit as per Financial Institutions Act 1993 Section-14 (C): the Tk 126.05 crore was paid as loan to PLFS Investments, which is 40.34 percent of total equity.

In the same way, the amount of Tk 114.14 crore paid as loan to Motiur Raman, one borrower, is equivalent to 36.53 percent of total equity.

According to a guideline of the Bangladesh Bank, the company as a financial institution should maintain capital adequacy ratio of at least 10 percent of its risk weighted assets.

Though the PLFS Investments showed Tk 185.44 crore excess against the required regulatory capital of Tk 100 crore, after considering the provisioning shortfall and losses in previous years the capital adequacy ratio falls short.

On the other hand, the auditor of the Bangladesh Submarine Cables, a state-owned company, gave the qualified opinion that the company's due of Tk 99.53 crore from Bangladesh Telecommunication Company Limited (BTCL) appears doubtful of being recovery in full.

But provision was made for Tk 9.20 crore only in the financial report for the year that ended on June 30, 2018.

A top official of the state-owned company said they will get the money through cash or in exchange of land. “So, we are not thinking it as doubtful anymore.”

Already the matter of instalment has been settled, so there is no challenge of getting the money, he added.
Source: https://www.thedailystar.net

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