23/05/2003 20:11
Despite the fact that the economic slowdown in Cyprus has affected negatively the majority of the 150 companies listed in the CSE, auditors have expressed their concern on nine companies, whose annual reports have been written in a distinctive, careful, ambiguous - if not in an incomprehensible – language.
The reports of the said companies are not “clean”. The auditors, however, do not have the courage to express a going concern on their customers – Cyprus is too small to hide all those cases that managers beg for not including those concerns in the report – but the reports are substantially different from the rest, which assure that “proper books of account have been kept by the Company” and give “a true and fair view of the state of affairs”.
The majority of the said reports belong to financial companies, as well as an IT company, a trading company and a hotel-sector company.
“Headache” for financial companies
Five out of nine financial companies outline in their reports the prevailing conditions of the financial sector and the Cyprus economy in general. The report of ProChoice is probably the “toughest” one, as audit firm KPMG refer to “uncertainty on whether the Company is able to continue as an active financial unit”. KPMG, which otherwise “does not express a going concern qualification on its opinion” refer to a long note, which deals with the negotiations of the Board of Directors with the bankers for the conversion of overdrafts to long-term loans with favourable terms.
The financial statement of ProChoice has affected the auditors’ report of its subsidiary, CPI Enterprise Development. According to KPMG, ProChoice has reduced the possibilities of CPI to collect the debts of CYP 1.7 million from ProChoice.
The auditors’ report of CPI mentions - and this is odd - that the provisions of the Company’s memorandum on the preparation and approval of the accounts from the Board of Directors, have not been kept, while a relevant note clarifies that the Board of Directors of CPI consists of two Board members (out of nine provided by the memorandum and out of four needed for a quorum). The auditors once again do not express a going concern qualification.
As far as MarkeTrends is concerned, KPMG point out the negotiations with the banks and the negative economic conditions. KPMG stresses that this economic environment “indicates uncertainty, which results from the doubts for the ability of the financial companies to cash in their debtors and assets and settle their liabilities within the framework of their operations”.
Debts, debts…
In the annual report of Europrofit and CLR Investment, audit firm Pricewaterhouse Coopers have focused on the debts of related companies and associates. Coopers have reported debts of CYP 5.3 million of Piraeus Bank to Europrofit – subsidiary of CLR Investment – from the market share of Euroinvestment. Although they do not give a going concern qualification on their report, Coopers refer to “uncertainty in relation to the collection of debts”.
Bad investments
In Global Consolidator and Pierides, the auditors stress the changes that may arise in the financial statements for the financial year 2001 from the sale of the Group’s subsidiaries in Bulgaria. In their report, audit firm Savvides and Partners/PFK note that the financial statements of the subsidiaries in Bulgaria were unaudited.
Audit firm Ernst and Young point out that in the case of Pierides, the Company was unable to obtain the audited financial statements of its associate Elcabel Cyprus Ltd and stresses that there has been a devaluation of the investment in Elcabel of CYP 390.160 due to “the concerns for the future performance of the company”.
Dome
As far as Dome Investments is concerned, which is actively involved in the hotel sector, KPMG have focused on the current liabilities that amount to CYP 415.478. The audit firm has used an exceptionally “tough” language, pointing out that “the continuance of the Company’s operations depends on the provision of finance facilities and/or its profits”.
Avacom: What happened between 2000 and 2001?
In their report for Avacom Computer Services, Ernst and Young refer to the adjustments in the comparative results and balance sheet of the Company and the Group due to changes in the accounting treatments and the correction of errors, tracked down in the financial statements of 2001 and 2000 . It is noted that in the period 2000-2001, Avacom’s auditors were Ernst and Young.
The reports of the said companies are not “clean”. The auditors, however, do not have the courage to express a going concern on their customers – Cyprus is too small to hide all those cases that managers beg for not including those concerns in the report – but the reports are substantially different from the rest, which assure that “proper books of account have been kept by the Company” and give “a true and fair view of the state of affairs”.
The majority of the said reports belong to financial companies, as well as an IT company, a trading company and a hotel-sector company.
“Headache” for financial companies
Five out of nine financial companies outline in their reports the prevailing conditions of the financial sector and the Cyprus economy in general. The report of ProChoice is probably the “toughest” one, as audit firm KPMG refer to “uncertainty on whether the Company is able to continue as an active financial unit”. KPMG, which otherwise “does not express a going concern qualification on its opinion” refer to a long note, which deals with the negotiations of the Board of Directors with the bankers for the conversion of overdrafts to long-term loans with favourable terms.
The financial statement of ProChoice has affected the auditors’ report of its subsidiary, CPI Enterprise Development. According to KPMG, ProChoice has reduced the possibilities of CPI to collect the debts of CYP 1.7 million from ProChoice.
The auditors’ report of CPI mentions - and this is odd - that the provisions of the Company’s memorandum on the preparation and approval of the accounts from the Board of Directors, have not been kept, while a relevant note clarifies that the Board of Directors of CPI consists of two Board members (out of nine provided by the memorandum and out of four needed for a quorum). The auditors once again do not express a going concern qualification.
As far as MarkeTrends is concerned, KPMG point out the negotiations with the banks and the negative economic conditions. KPMG stresses that this economic environment “indicates uncertainty, which results from the doubts for the ability of the financial companies to cash in their debtors and assets and settle their liabilities within the framework of their operations”.
Debts, debts…
In the annual report of Europrofit and CLR Investment, audit firm Pricewaterhouse Coopers have focused on the debts of related companies and associates. Coopers have reported debts of CYP 5.3 million of Piraeus Bank to Europrofit – subsidiary of CLR Investment – from the market share of Euroinvestment. Although they do not give a going concern qualification on their report, Coopers refer to “uncertainty in relation to the collection of debts”.
Bad investments
In Global Consolidator and Pierides, the auditors stress the changes that may arise in the financial statements for the financial year 2001 from the sale of the Group’s subsidiaries in Bulgaria. In their report, audit firm Savvides and Partners/PFK note that the financial statements of the subsidiaries in Bulgaria were unaudited.
Audit firm Ernst and Young point out that in the case of Pierides, the Company was unable to obtain the audited financial statements of its associate Elcabel Cyprus Ltd and stresses that there has been a devaluation of the investment in Elcabel of CYP 390.160 due to “the concerns for the future performance of the company”.
Dome
As far as Dome Investments is concerned, which is actively involved in the hotel sector, KPMG have focused on the current liabilities that amount to CYP 415.478. The audit firm has used an exceptionally “tough” language, pointing out that “the continuance of the Company’s operations depends on the provision of finance facilities and/or its profits”.
Avacom: What happened between 2000 and 2001?
In their report for Avacom Computer Services, Ernst and Young refer to the adjustments in the comparative results and balance sheet of the Company and the Group due to changes in the accounting treatments and the correction of errors, tracked down in the financial statements of 2001 and 2000 . It is noted that in the period 2000-2001, Avacom’s auditors were Ernst and Young.
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