Chinatrust Fires External Auditor
Chinatrust (Phils.) Commercial Bank Corporation (CHTR), a Taiwanese bank, has decided in its Annual Stockholders Meeting to fire its external auditor, Laya Mananghaya & Co. (LMC), a member firm of KPMG, for incompetence, based on a strongly-worded corporate disclosure the bank sent to the Philippine Stock Exchange on Monday.
Based on the disclosure, LMC has failed to deliver competency and quality in its work as certifying auditors of the bank, due supposedly to limited exposure of the engagement partner and the firm in standards and practices applicable to the banking industry, and poor service despite the bank's effort to communicate the firm's weak points at the conclusion of its 2004 audit. LMC was appointed as external auditors of Chinatrust for the 2004 and 2005 calendar years.
In an addendum to the statement it made earlier, the management of Chinatrust through its President and Chairman, made clarifications referring to the original statements as "merely opinions of some members of the Bank's Audit Committee expressed in a meeting, and do not necessarily reflect the conclusions of the Bank". It has furthermore stated that "the change of the external auditor is part and parcel of the Bank's corporate governance practice which requires a thorough evaluation of vendor relationships on a regular basis".
It can be recalled that LMC performed due diligence review on the books of UCPB the result of which will then be the basis of PDIC's approval of a debt-to-equity conversion deal with UCPB. Based on the deal, PDIC will purchase a total of P13 billion worth of Non-Performing Loans (NPLs) as UCPB is in need of fresh capital infusion back then. LMC's performance on the engagement was heavily scrutinized by critics of the business community, describing the engagement team's performance as biased, inefficient and incompetent.
Mario T. Mananghaya, managing partner of LMC, expressed great disappointment on the statement released by Chinatrust, stating such publicity "has created tremendous concern from our clients, our people and our international affiliation". He added that the said statement brought agonizing pain among many members of the firm. Furthermore, the statement was released on the eve of San Miguel Corporation's announcement that it has appointed LMC to be its external auditor effective 2006. San Miguel Corporation is the Philippines' largest publicly-listed food and beverage conglomerate.
LMC has battled bouts of mismanagement and staff incompetency over the past years, with mass resignations and scandals plaguing its walls. I, for one, am a witness to the inefficiency of the way business in run within the corners of the 21st and 22nd floors of Philamlife Tower. However, unlike San Miguel, I knew when it was time to step out the door, that was shortly after Jaime Laya left while the firm continues to benefit from his good name. Pats to Chinatrust for finally opening its corporate eyes and see what LMC is really all about: profit.
Based on the disclosure, LMC has failed to deliver competency and quality in its work as certifying auditors of the bank, due supposedly to limited exposure of the engagement partner and the firm in standards and practices applicable to the banking industry, and poor service despite the bank's effort to communicate the firm's weak points at the conclusion of its 2004 audit. LMC was appointed as external auditors of Chinatrust for the 2004 and 2005 calendar years.
In an addendum to the statement it made earlier, the management of Chinatrust through its President and Chairman, made clarifications referring to the original statements as "merely opinions of some members of the Bank's Audit Committee expressed in a meeting, and do not necessarily reflect the conclusions of the Bank". It has furthermore stated that "the change of the external auditor is part and parcel of the Bank's corporate governance practice which requires a thorough evaluation of vendor relationships on a regular basis".
It can be recalled that LMC performed due diligence review on the books of UCPB the result of which will then be the basis of PDIC's approval of a debt-to-equity conversion deal with UCPB. Based on the deal, PDIC will purchase a total of P13 billion worth of Non-Performing Loans (NPLs) as UCPB is in need of fresh capital infusion back then. LMC's performance on the engagement was heavily scrutinized by critics of the business community, describing the engagement team's performance as biased, inefficient and incompetent.
Mario T. Mananghaya, managing partner of LMC, expressed great disappointment on the statement released by Chinatrust, stating such publicity "has created tremendous concern from our clients, our people and our international affiliation". He added that the said statement brought agonizing pain among many members of the firm. Furthermore, the statement was released on the eve of San Miguel Corporation's announcement that it has appointed LMC to be its external auditor effective 2006. San Miguel Corporation is the Philippines' largest publicly-listed food and beverage conglomerate.
LMC has battled bouts of mismanagement and staff incompetency over the past years, with mass resignations and scandals plaguing its walls. I, for one, am a witness to the inefficiency of the way business in run within the corners of the 21st and 22nd floors of Philamlife Tower. However, unlike San Miguel, I knew when it was time to step out the door, that was shortly after Jaime Laya left while the firm continues to benefit from his good name. Pats to Chinatrust for finally opening its corporate eyes and see what LMC is really all about: profit.
Labels: random ramblings
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