FOLLOWING THE release of its special auditor’s report yesterday, mainboard-listed China Hongxing Sports Limited (中国鸿星) said it is cooperating with the Singapore Exchange to further improve its existing corporate governance processes, and to obtain the necessary paperwork to meet compliance procedures for the approvals to resume trading on SGX.
In a statement posted on the SGX website, it said its existing corporate governance measures include :
> the appointment of an international auditing firm as the company’s external auditor,
> the establishment of whistle-blowing policies and procedures, and
> the appointment of a chief financial officer responsible for financial management, accounting and company secretarial matters of the Group.
The Board had also taken an active role in its internal controls such as the yearly appointment of an internal auditor from FY2007 to FY2010, on top of the annual appointment of another firm of auditors (save for FY2007, when the same firm was appointed to perform both the internal audit as well as quarterly procedures).
In this regard, the Board carried out reviews and tested the controls of the processes in the Group’s subsidiaries – Fujian Hongxing Erke Sports Goods Co Ltd and Quanzhou Hongrong Light Industry Co Ltd.
These reviews were related to, among others, account receivables, cash management, advertising and promotion expenses, management of distributors and distribution channels, costing of finished products, and management of inventory requisition.
Other corporate governance measures that are already in place includes the identification of gaps in business processes and suggestions by the Board for improvements, where controls can be strengthened with follow-up measures.
The Group’s subsidiaries are also subjected to quarterly procedures by the auditors for checks on receivables, inventories, payables, and cash balances from the third quarter of FY2007 to the third quarter of FY2010.
Operations at the Group remains robust with targets to open new stores in untapped areas in Mainland China, to enhance operating efficiency at the retail end, and bolstering efforts in brand building and product innovation to drive up sales and revenues to the Group.
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