Summary under the new management led by businessman

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SUMMARY Under the new management, led by businessman Dennis Uy and the Sy family’s SM Investments Corp., the board engaged the audit firm, SyCip, Gorres, Velayo & Company (SGV & Co.), to perform an opening balance sheet audit of the company and subsidiary as of quarter ended March 31, 2017. The purpose was to establish a firm opening balance sheet for the new shareholders which is customary after an acquisition. The audit was conducted to ensure fair presentation of financial statements and establish accountabilities. The audit showed that there is alleged inflation of financial statement since 2015. The audit revealed certain accounts in the previously audited financial
required restatements. The management, with the support of and approval of the newly elected members of the audit committee and the board of directors, agreed to restate financial statements covering the period 2015 and 2016 as well as the unaudited financial statements for the three months period ending March 31, 2017, to reflect fairly the state of the business. The consolidated financial statements of 2GO & its subsidiary for the year from 2015 to 2016 were audited by KPMG R.G Manabat & Company. KPMG audit in those year issued unqualified opinion stating that the financial statements were fairly presented in accordance with PFRS. SGV & Co. had been 2GO's independent public accountant for almost decades (from 1977 until 2013). It was replaced by KPMG in 2014 due to “major disagreement” between management and the auditing firm over how to treat a deferred tax asset during the 2013 audit. According to Tagud that in 2014, the company turned around and because there were losses in the previous two years, there was net loss carryover. It is in deferred tax assets. “A deferred tax asset is an accounting item on a company's balance sheet that may be used to reduce taxable income.” Tagud added that the deferred tax asset, which is more than P300 million, would have been used the following year, 2015, but SGV said that the company have to write it off to make money. And then the board decided to fire SGV because they insisted it to write off. In June 2017, 2GO filed its complete restated financial documents for the year 2015 & 2016, as well as the first quarter of 2017. The result showed that the restated item are non-cash and non-recurring. Uy state that the restatement reflects the commitment of the new management and the board to raise corporate governance standards in the company.
ANALYSIS On July, the Security and Exchange Commission starts investigating the alleged discrepancy in bookkeeping of logistic 2GO Group Inc. unearth by the new investor group now running the company after the company filed its restated financial statement. The restated revealed certain accounts that are reclassified and overstated.

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