Accounting Fraud in Asia: Survival in the Asian Capital Jungle – Who Knows What When + Remembering Accounting Superhero Abraham Briloff

 “Bamboo Innovators bend, not break, even in the most terrifying storm that would snap the mighty resisting oak tree. It survives, therefore it conquers.”
BAMBOO LETTER UPDATE | December 29, 2014
Bamboo Innovator Insight (Issue 63)§  The weekly insight is a teaser into the opportunities – and pitfalls! – in the Asian capital jungles.§  Get The Moat Report Asia – a monthly in-depth presentation report of around 30-40 pages covering the business model of the company, why it has a wide moat and why the moat may continue to widen, a special section on “Inside the Leader’s Mind” to understand their thinking process in building up the business, the context – why now (certain corporate or industry events or groundbreaking news), valuations (why it can compound 2-3x in the next 5 years), potential risks and how it is part of the systematic process in the Bamboo Innovator Index of 200+ companies out of 15,000+ in the Asia ex-Japan universe.

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Dear Friends,Survival in the Asian Capital Jungle: Who Knows What When – Remembering Accounting Superhero Abraham Briloff

BriloffDecember is an unrelenting month – December last year took away from the world an accounting superhero, Professor Abraham Briloff. Right up until about a month before his death on Dec 12 at age 96, Abe was unrelenting in alerting Barron’s about some accounting fraud he had uncovered that was hidden in corporate America’s financial statements – a lifelong endeavor he persisted for 45 years since his enlightening “Dirty Pooling” article on July 15, 1968. When financial crisis strikes, Abe’s words become the Generally Accepted Accounting Principles. Even though Abe was legally blind, he could see clearly the accounting issues, having memorized pages of the company’s financials that had been read to him by his daughter Leonore or his grad students at City University of New York’s Baruch College. When asked about his thought process, the grandmaster said, “It begins with some sensitivity as to where the problem might be. Somehow, there’s a serendipity where I know that there’s an issue out there.” Abe elaborates his Process in a Barron’s interview:

“The numbers reverberate in my mind, and then I turn to Leonore and say, ‘Get for me the data in these areas,’ or ‘Read such-and-such to me from whatever document you might find.’ He records his thoughts on tape, on one of the several recorders that he keeps on the desk in his study, and then he reflects further. When he goes to bed, the numbers still dance in his mind, and he keeps a tape recorder beside his bed. It is as if he can see the numbers, much as Beethoven could hear the melodies even though deaf. As new numbers come in, he incorporates them into his thinking, to confirm or reject his original hypothesis. “Something hits. You say, ‘Why is it there?’ Or something that should be there, isn’t there,” he says. He performs the most critical calculations in his head.”

Abe’s heroic commitment to exposing accounting frauds has been a source of inspiration for us when crafting out Accounting Fraud in Asia, an official course in the Singapore Management University (SMU) degree curriculum that will be launched in January 2015. The course, which is focused on the capital markets perspective, is the first of its kind to be taught in universities in Singapore/Asia and worldwide and is open to all university students worldwide on global exchange programs with SMU. The course is conducted in an interactive session over 15 weeks. We shall focus on developing an interdisciplinary critical thinking and accounting Perspective with a real-world emphasis in the group and individual project writings, presentation and participation. Perspective has two definitions: (1) Context: A sense of the larger picture of the world, not just what is immediately in front of us; (2) Framing: An individual’s unique way of looking at the world, a way that interprets its events. With Perspective, we can discover leverage we didn’t know we had.

We have also started a simple website called “Asian Extractor: Unearthing Accounting Fraud in the Asian Capital Jungle” (www.AsianExtractor.com). Asian insiders Extract and expropriate wealth in artful accounting tunneling methods as opposed to western-style accruals-based earnings management. We attempt to Extract them out in the Asian capital jungle; akin to the Lotus who extracts mud out of her hollow stem and the stem grows up with determination, enabling the Lotus flower to blossom above the muddy water, rising above the defilement and remaining unstained and pure.

AsianExtractor will be a visible global platform for the students to showcase their talent and analysis and to contribute their findings and add value to the global business and investment community, just like Abe and his students. We hope the website will develop into a thought leadership platform on accounting fraud in Asia with analyses and opinions from the students and expert guest speakers in the course as well as from global experts. We are an admirer of the Institute of Design at Stanford in terms of its unique curriculum design as our benchmark and we strive to make improvements over time with your valuable feedback and comments. If you would like to contribute an article to this thought leadership platform on accounting fraud in Asia, please drop us an email at: asianextractor@gmail.com or bambooinnovator@gmail.com.

The weblink is the presentation materials for Week 1 (Jan 5-9, 2015) – Survival in the Asian Capital Jungle: Who Knows What When. From Week 2 (Jan 12-16, 2015) onwards, the presentation materials will stand in for the Bamboo Innovator Weekly Insight and be made available for our Moat Report Asia subscribers only.

Survival in the Asian Capital Jungle

Here’s wishing everyone a Blessed New Year 2015 ahead.

Warm regards,

KB

The Moat Report Asia

www.moatreport.com

http://accountancy.smu.edu.sg/faculty/profile/108141/KEE-Koon-Boon

A new monthly issue of The Moat Report Asia is now available!

Access the in-depth idea presentation:

http://www.moatreport.com/members/

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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