Professor Kesree Narongdej, president of the Federation of Accounting Professions under the Royal Patronage of His Majesty the King, warned that retail investors might be damaged if the SET fails to consult the auditors of a company's financial statements and provides unverified information.

She was commenting on a recent stock plunge affecting mining and property development company Tongkah Harbour. Kesree's auditing company, AMT & Associates, is Tongkah Harbour's auditor.

"It's well known that the SET tries to protect investors' interests [by swiftly providing information to the public]," she said. "However, if the SET's comments are wrong, who's going to be responsible for the consequences?"

Late last month the SET allowed the securities of Tongkah Harbour to resume trading after the firm posted an audited Bt6-million net profit in 2006. However, early this month, Tongkah Harbour posted an audited net loss of Bt29.52 million in the first quarter of 2007, compared to a Bt23.35-million loss in the corresponding period last year.

Many claimed the loss was due to delayed booking, and the SET's senior vice president for market regulation, Sakkarin Ruamrangsri, revealed that the exchange was in the process of scrutinising the information. The price of the stock responded, diving from Bt3.80 per share on May 4 to Bt2.32 on May 21.

The SET has not yet finalised its investigation of the company's financial statement.

Kesree said the stock exchange should have consulted the auditor before announcing its probe to the public. Many retail investors have made phone calls to her company to complain about it.

"The Securities and Exchange Commission always consults with the auditor before making any announcements. The SET should scrutinise the issue first, to make sure that its comments will not hurt the investors," she said.

SET president Patareeya Benjapholchai said yesterday that the SET was scrutinising Tongkah Harbour's clarification of its net loss. It has not yet decided whether the company's securities should be transferred to the non-performing group.

Separately, the Federation of Accounting Professions is to hold a seminar targeting chief executives and chief financial officers of both listed and unlisted companies out of concern that there is little understanding about internal control.

"When executives are well aware of the effectiveness of the internal control system, there should be a regulation written as a guideline. Announcing the regulation now is probably useless because many, without knowledge, will conduct it in an inappropriate way," Kesree said.

PricewaterhouseCoopers ABAS lead partner Prasan Chuaphanich said that to strengthen the accounting professions, auditors themselves must be educated all the time.

"The nature of each business is different from others. Auditor must have expertise and knowledge in this specific nature to help companies by properly auditing their financial statements," he said.

Piyarat Setthasiriphaiboon

The Nation