February 27 (LBO) – Sri Lanka’s accounting watchdog said Tuesday it would take action against Touchwood over its accounting practices and would also probe the listed forestry investment firm’s auditor. The firm was audited by KPMG.
The Colombo Stock Exchange referred the company to the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) when Touchwood tried to issue bonus shares using tree growth valuations which were brought into the accounts, using a new ‘fair value’ international standard.
The watchdog said the estimates used by Touchwood in its 2005 and 2006 accounts were were ‘clearly unreliable.’
“The company has also not been able to provide the Board with any other estimates which are reliable,” SLAASB said in a statement to the stock exchange.
“Further the method of valuation used for the year ended 31st March 2005 was not in accordance with the International Accounting Standard, IAS 41 Agriculture, which the company has purportedly adopted.”
The watchdog said if IAS 41 had been followed the biological assets should have been valued either according to paragraph 24 (b) of the standard or at ‘cost less accumulated impairment’ according to paragraph 30