L35: Explanation for audit exception in reviewed FS of first 06 months of 2013

On 30/9/2013, Lilama Erection Mechanical Joint Stock Company explained audit exception that “the Company did not allocate corporate governance expenses to determine business performance from 01/01/2013 to 30/06/2013. Total governance expenses in short-term prepaid expenses were VND 1.3 billion” as follows:

Construction works that Lilama Erection Mechanical Joint Stock Company were deploying had execution time of over 01 year; some were finished before 30/6/2013 but were not accepted yet. In order to ensure revenue to accord with expenses, the Company applied clause 2, article 10 of Circular no. 242/TT-BTC dated 30/12/2009 of Ministry of Finance regulating that “For products with production time of more than 01 year, corporate governance expenses arising in the year were allocated to half-finished production expenses”.

However, according to auditing company, this application did not accord with current corporate accounting regulation. So the governance expense amount above needed to be recorded in business performance report for the period from 01/01/2013 to 30/06/2013. This would make profit before tax from 01/01/2013 to 30/06/2013 of Lilama Erection Mechanical Joint Stock Company to decrease appropriately VND 1.3 billion

HNX

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