Accounting firm Isla Lipana & Co. issued a statement pointing out that it is the auditor of Maria Francesca Tan (MFT) Group of Companies, Inc. only, and not any other companies under the group.
“‘Maria Francesca Tan (MFT) Group of Companies, Inc.’ is our audit client. While the name of the company we audit bears ‘Group of Companies,’ we are auditing that company as a standalone entity and we are not the auditors of any other company within the group, or the group in general,” the statement said.
The accounting firm was named by the SEC among those implicated in the criminal complaint filed with the Department of Justice as it “served as the independent auditor of the MFT Group and Foundry Ventures for the fiscal years 2018 to 2021.”
Isla Lipana said that, “The last report we have issued for the standalone company was for the year ended 31 December 2021. We have not yet issued our report for the calendar years 2022 and 2023 pending completion of our audit procedures. We shall fully cooperate with the pending investigation.”
In relation to the misrepresentations in the MFT Group’s financial statements, the SEC said in a statement that it found that Isla Lipana colluded with the MFT Group in their fraudulent activities by making it appear that the financial statements of the company were fairly presented despite inconsistencies and inaccuracies in the audited financial statement (AFS).
Isla Lipana issued an unqualified opinion for the years 2020 and 2021, indicating that the AFS of the MFT Group are fairly presented in all material respects and in accordance with the identified financial reporting framework.
“The investing public, including and especially MFT’s investors, relied on these AFS in making investment decisions. Stated otherwise, the information/entries in the AFS of the MFT Group were essential in convincing investors to part with their hard-earned money, and entrust the same to the MFT Group, because they presented MFT Group as financially healthy and viable,” the complaint read.
On the other hand, Isla Lipana issued qualified opinions for the 2018 and 2019 AFS of MFT Group based on the failure of MFT Group to maintain sufficient appropriate accounting records and documents to support the carrying amount of cash and property, net as of January 1, 2018 and December 31, 2018.
Said qualified opinions, however, were not related to the reported net income of the Company where misrepresentations were noted.
In fact, the respondent auditors did not include in its opinion the lack of basis of the MFT Group to earn the reported dividend income thereby creating an impression in the eyes of the users of the subject financial statements that the subject entity, indeed, fairly presented its revenue, said the SEC.
“Again, these AFS which apparently concealed the misrepresentations of the MFT Group but which were nonetheless certified by respondent auditors, were relied upon by the investing public in making investment decisions,” it noted.
The complaint said that, “Considering that this discrepancy happened over the years, and given its significant impact on the financial position of the MFT Group, the same cannot be considered an isolated event. The fact that respondent auditors repeatedly engaged themselves in this kind of irregularity is a clear indication of its intention to conceal the actual financial status of the MFT Group, to the prejudice of its investors.”