SGX instructs China Taisan to conduct special audit of itself

Singapore

THE Singapore Exchange (SGX) on Friday instructed troubled fabric maker China Taisan Technology to appoint an independent special auditor to perform a cash audit of the company going as far back as 2014.

SGX has also required that China Taisan clear the terms of reference of the special audit with it.

This should include a review of the circumstances surrounding the acquisition and payment of PPE (property, plant and equipment) expenditure of 160 million yuan (S$33.3 million), including the valuation report signed off by Fujian Mincai Certified Public Accountants on April 18.

Last week, China Taisan said in response to queries from SGX that its current auditors are "concerned on the valuation of additional PPE in the amount of RMB160 million occurred in FY2017".

SGX has also asked that the special auditors review the circumstances surrounding the customer claims for defective goods in 2014, the acquisition and subsequent impairment of PPE in 2015 and 2016, and the write-off of VAT recoverables in 2015.

As well, SGX has required that China Taisan appoint a second suitable independent director, resident in Singapore.

The company has until June 30 to comply with these instructions.

Shares of China Taisan have been suspended from trading since Monday.