The industry questioned Kelon semi annual report has admitted 2 major accounting mistake

KELON (000921.SH) semi annual report released yesterday finally dragged on.

Although the company's semi annual report admitted: the company in 2004 to confirm sales revenue of more than $431 million, due to this error, so that the company earlier this year to reduce the undistributed profits of $112 million." But the industry still believe that the semi annual report of the existence of a lot of doubt kelon.

Concerned about the long-term financial problems of Kelon CPA Zhu Defeng told the "First Financial Daily" reporter pointed out: "Kelon 2005 semi annual financial report disclosed only two major accounting errors, which are not properly recognized in 2004 sales revenue of 431 million yuan in 2003 and the omission of receivables and payables each 65 million yuan. Obviously this is not entirely consistent with the findings of the Commission's investigation, it is also necessary to focus on whether there are other major Kelon accounting errors, which will have a significant impact on the financial report from 2002 to 2004."

Zhu Defeng said, for example, is not appropriate to confirm the sales income, Kelon Electrical Board for DDT LLP in its 2004 annual accounting statements issued by the auditing opinions involving matters made it clear that the special said: "think of the customer sales is no risk and error, the model of sales also recognized in the past year".

While an unnamed financial expert told reporters: "according to the report of Kelon Kelon, 2004 year has inflated huge revenues and profits, but in fact, this has not been reported in the first half of the audit, many financial problems can not give the appropriate explanation, believe there are more financial fraud the devices have not known."

Previously, the investigation by the Commission confirmed that since 2002, the legal representative, chairman of Kelon Electrical Gu Chujun take inflated income, less expenses and other means in Kelon, inflated profits, resulting in financial report and the fact that the company disclosed serious discrepancies. As a matter of fact, the major errors of Kelon in 2005 semi annual report is not much, Kelon Electric reported six major accounting errors only two.

In addition, Kelon semi annual report shows that in violation of security, the current board also believes that up to now no violations found. In the occupation of funds, the report said: "up to now, the company has hired a professional agency Mr. Gu Chujun alleged economic crimes investigation, matters of the company may be caused by the occupation of funds, including the situation, but did not form the investigation conclusion, the capital occupancy for the company as of now can know. The investigation to the company will be disclosed after."

Found that Kelon in 2005 semi annual report page said: "Yan Yousong Zhang Hong, director, Gu Chujun board of directors were the police investigation and criminal compulsory measures for alleged economic crimes, so the three directors can not guarantee the authenticity, accuracy and completeness of the contents of this report. In addition to the three directors, the board of directors and other directors to ensure that the information contained in this report there is no false records, misleading statements or material omissions, and its contents bear the authenticity accuracy and completeness of individual and joint liability."

The source said: "this shows that the directors to ensure that Kelon no other significant accounting errors, the Commission is clearly identified from the beginning of 2002 the major fraud, not only alleged inflated revenue, and reducing false huge cost, this is in the negative findings of the sfc."

In addition, Kelon semi annual report also revealed that the company's executive director Zhang Hong, also on suspicion of economic crimes, in August 2nd by the public security organs to investigate and take criminal coercive measures. Prior to this, the Department of Kelon has 6 people have been taken and other criminal measures.