Error sees Pou Sheng bosses out the door
Following the discovery of an accounting error, a senior executive of Pou Sheng International has been terminated and the resignation of another accepted, Yue Yuen Industrial Holdings has reported to the Hong Kong Stock Exchange.
Yue Yuen is a Taiwanese footwear manufacturer headquartered in Hong Kong. It holds a stake of about 62.41 per cent in Pou Sheng, which is accounted for as an indirect non-wholly owned subsidiary. Pou Sheng is one of the leading retailers in China in the lifestyle and sportswear market, retailing brands such as Converse, Rockport, Geox and Keds with more than 5000 stores of its own and another 3000 sub-distributors across China.
While preparing the Pou Sheng annual results for the year ended December 31, an internal review last week found incorrect sales records for December, “which could potentially lead to recognition of revenue for sales transactions that did not take place before the end of the year”.
Ye Yuen says the amount of purported sales is not significant when compared to the level of revenue of Pou Sheng.
Pou Sheng’s board of directors considers the incident reveals weakness in its financial controls, and has engaged Deloitte Touche Tohmatsu to audit its accounting records.
As a result of the Incident and based on the preliminary review of the sales and accounting records by Pou Sheng, CFO Chen Kuo-Lung was found to have authorised and approved the purported sales. Accordingly, his employment was terminated immediately.
Further, Pou Sheng CEO/executive director Kwan Heh-Der, when made aware of the incident, tendered his resignation. This was accepted by the board with immediate effect.
The Pou Sheng board says it believes the termination and resignation have not created any material adverse impact on the daily business or financial status of the Pou Sheng Group, and that incident will not have any significant impact on the company or the release of its final results for the year ended December 31.