all T-Mobile 2:55 PM Discussion 2: Graded Assignme Write a 750 word paper on any

Question

all T-Mobile 2:55 PM Discussion 2: Graded Assignme Write a 750 word paper on any accounting irregularity involving a company between 2010-2017. You cannot select a company chosen by your classmate to write on this topic. So, once you select your company to write about on this topic, post it's name here so that everyone knows that you have "reserved" this company for yourself. If you write about a company's accounting irregularity and that has already been selected by one of your classmates, you will not receive any credit for that assignment. Deadline; 11.59 pm EST December 3. Show Less Marrone Bio Innovations Started by Derek Armstrong 2 replies Toshiba Started by Kennard Dorsey 1 reply Start Thread

Explanation / Answer

Etihad Etisalat Accouting Irregularity

Saudi Arabia’s telecommunications company, Mobily, suspended its CEO, Khalid al-Kaf, effective November 21, after the company was forced to restate 18 months of earnings due to accounting errors. An article on Bloomberg stated that Mobily’s 2013 financial statements were affected by an error in the timing of revenue recognition from a promotional program. As a result, the company’s shares plummeted 30 percent since Oct. 30 while third quarter profits dropped more than 70%.

The company's decision, effective from Nov. 21, follows errors in Mobily's accounting that led the company to restate 18 months of previously-announced earnings, wiping out $381 million of prior profits.

Kaf was suspended until Mobily's audit committee finishes a probe into these accounting errors, according to a statement to Riyadh's bourse

Deputy Chief Executive Officer Serkan Okandan is running Mobily's operations in the meantime. Okandan was appointed in mid-October, just prior to the company's shock earnings announcement.

Abu Dhabi-listed Etisalat owns 27.5 percent of Mobily and Okandan is also chief financial officer of the United Arab Emirates' operator.

On Nov. 3, Mobily cut its profits for 2013 and the first half of 2014 by a combined 1.43 billion riyals ($381.2 million) and also reported a 71 percent drop in third-quarter profit. ($1 = 3.7516 Saudi riyals)

Investors, while relieved that matter has now been publicly disclosed after weeks of rumours, say more transparency and communication is needed amid fears of further revelations.

“The elephant in the room is whether it was disclosed as soon as it became known to senior management and what controls have failed to let this happen in the first place,” said Henri Chaoul, chief investment strategist at Jeddah-based Alkhabeer Capital.

“The way market regulators will deal with the topic will have a long lasting impact.” Global fund managers have been eying the market’s strong liquidity and array of blue-chip companies that have benefited from strong economic growth on the back of high oil prices and generous government spending. The country’s National Commercial Bank recently closed its $6bn initial public offering. Other regional markets, such as the United Arab Emirates and Qatar, have also been included in MSCI’s emerging markets index, increasing the amount of liquidity available in the region and a focus on Gulf markets. “This will be the first test of how the capital markets deal with such a scandal,” said one market participant. “Rather than covering this up, they should investigate it – it may be painful, but if they want inward investment they need to show a level of transparency.” Mobily is 27.5 per cent owned by Etisalat, the UAE state-owned telecommunications company. This is not the first setback the Abu Dhabi-based telecoms company has faced in its global expansion plans, having become embroiled in 2010 in an Indian corruption scandal that led to the jailing of a former Indian telecoms minister.

The public prosecution filed the suit in the Committee for the Resolution of Securities Disputes, which has jurisdiction over the dispute, the Capital Markets Authority (CMA).

It said the suspects had earlier been referred on suspicion of violating Article 49 of Saudi Arabia’s Capital Market Law, which relates to creating a false or misleading impression of a company’s value.

The lawsuit follows an investigation launched by the CMA after Mobily restated 27 months of earnings due to accounting errors related to the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns.

The restatements cut 1.76 billion riyals ($469 million) off the profits made during that time by the company, which is partly owned by Abu Dhabi-based Etisalat.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.