Scandal-hit China Gaoxian's auditors issue "qualified" opinion on accounts

SCANDAL-hit China Gaoxian Fibre Fabric Holdings said its independent auditor has given a "qualified" opinion on the company's financial statements.

Auditor Foo Kon Tan Grant Thornton said missing information from previous years could have affected the accounts for the year ended Dec 31, 2013.

The bulk of the firm's accounting books and records for the period before April 1, 2011 could not be found, the auditor noted in a Singapore Exchange (SGX) filing.

The management could not give "satisfactory explanation" for differences between management accounts provided for audit and the audited statements of its Chinese units that were filed with Chinese authorities, it added.

Since it could not assess the impact of those gaps on last year's financial statements, it had to qualify its opinion.

But except for those "possible effects", the firm's financial statements were properly drawn up in accordance with Singapore financial reporting standards, the auditor said.

China Gaoxian, which makes fabric, was hit by an accounting scandal after previous auditors Ernst & Young could not verify bank balances in its units for the year ended Dec 31, 2010.

The firm has been mired in red ink for a while. It told the SGX last month that it had made pre-tax losses for three consecutive years.

It posted a loss of 215.4 million yuan for the 12 months to Dec 31 last year, worse than the 86.5 million yuan loss the year before. Revenue also fell 45 per cent to 271.7 million yuan last year.

China Gaoxian's shares closed flat at 3.1 cents last Friday.

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