The SET's Executive Vice President, Mrs. Patareeya Benjapolchai, announced that the SET has introduced the posting NP and SP signs to flag the temporarily suspension of trading in a security in the case where the auditor's opinion is a Disclaimer or Adverse Opinion. This should prompt investors to closely scrutinize the financial statement, auditor's opinion, and remarks on the financial statement, of such a listed company. This new measure will apply to those financial statements for the year ending December 31, 2003, which will be submitted to the SET from the end of February onwards.
Listed companies will be required to specify the type of auditor's opinion on the reports summarizing their operating results, which show net profits (or losses) plus earnings per share (Form 45). The type of auditor's opinion, when included, can be classified in one of three ways: (1) when there is a Qualified Opinion, (2) when there is a Disclaimer, or (3) when there is an Adverse Opinion. The SET has informed all listed companies of this new regulation and held training courses to explain its application.
"In general, an auditor's opinion on a financial statement can be broken down into four types, (1) an Unqualified Opinion, (2) a Qualified Opinion, (3) a Disclaimer of Opinion, and (4) an Adverse Opinion.
In the case of a Qualified Opinion, the listed company must clearly state this in its financial statement submitted to the SET, to allow investors to be notified so that they can carefully consider the auditor's opinion.
However, if the auditor has a Disclaimer of Opinion or an Adverse Opinion, the SET will post a SP (Suspension) or NP (Notice Pending) sign because these opinions are a sign that the listed company's financial statements may not accurate. The Securities and Exchange Commission (SEC) may ask the listed company in question to amend its financial statement. The posting of the SP and NP signs will draw shareholders' and general investors' attention to the importance of the auditor's opinion so that they can cautiously review the listed company's financial statement," Mrs. Patareeya said.
In the case where the auditor issues a Disclaimer of Opinion, the SET will post a SP sign suspending trading for one day to enable shareholders and general investors to have sufficient time to take note of the auditor's opinion, including any clarification by the company. The SET will later grant the company permission to continue trading its securities on the following business day, followed by the posting of a NP sign until the time it is concluded whether the company must amend its financial statements or not.
In the case where the company is instructed to amend its financial statement, the SET will post a SP sign for one day to enable investors to become aware of the need for the company to amend its financial statements. The SET will permit trading of its securities on the following business day and will post a NP sign until such time as the company submits an amendment by its auditors to its audited or reviewed financial statement to the SET for dissemination.
In the case that it is concluded that it is not necessary for the company to amend its financial statements, the SET will post a NR (Notice Received) sign for investors to see.
Where the auditor expresses an Adverse Opinion, the SET will post a SP sign signaling the temporary suspending of trading until the company submits an amendment of its audited or reviewed financial statement to the SET for disclosure to investors, or until it has been established that the company does not need to amend the aforementioned financial statement.
In the case where the company with the auditor's unqualified or a qualified opinion is instructed later to amend its financial statement, the SET will post a SP sign for one day on the day that the SET receives the aforesaid information and will post a NP sign on the following business day until such time as the company submits an amendment of its audited or revised financial statement to the SET from its auditor.
"These guidelines will prompt investors to pay more attention to reviewing a company's financial statement before deciding to invest. At the same time, management and the board of governors of listed companies will have to exercise more care in its auditing process. Moreover, the SET advises listed companies to consult with their auditors before submitting their opinions to the SET, to ensure a clear and accurate understanding of this issue. This would ensure that those relying on a company's financial statement receive accurate information," Mrs.Patareeya added.
