CEO of Singapore Firm Fined for Failing to Recognize S$16 Million Impairment Loss

Andrew Sin Kwong Wah, who serves as the CEO of Miyoshi Limited, a manufacturing company based in Singapore, has been fined S$22,400 following the company’s failure to acknowledge a substantial impairment loss of S$16 million in its financial statements. This penalty was announced on January 10, in response to charges alleging that the financial reports for the fiscal year ending on August 31, 2019, were presented at the company's annual general meeting without adherence to the established accounting standards outlined in the Companies Act.

The impairment loss emerged from a decrease in the value of Miyoshi’s equity investment in Core Power (Fujian) New Energy Automobile, a foreign entity. Miyoshi, known for its production and sale of electric vehicles in China through this investment, neglected to report the substantial loss, resulting in an overstatement of its net assets by the same amount. An independent valuation had been conducted, confirming that a significant impairment had taken place, yet this information was not reflected in the company’s financial statements.

Consequently, Miyoshi's financial documentation for the 2019 fiscal year was characterized as "materially misstated," providing an inaccurate representation of the company’s financial health. Had the company accounted for the impairment loss correctly, its reported losses before income tax would have surged over 30 times, amounting to S$16.78 million, and its total asset values would have dipped by 19% to approximately S$67.9 million.

In light of these findings, the Accounting and Corporate Regulatory Authority (ACRA) emphasized the duty of company directors to provide precise and credible financial information. This incident, part of ACRA’s ongoing reviews of selected financial statements to ensure compliance, underlines the authority’s commitment to uphold standards in financial reporting within Singapore. Penalties for failing to adhere to these regulations can be significant, with fines reaching as high as S$250,000, emphasizing the importance of transparency and accuracy in corporate financial disclosures.