CHC trial: Not auditor’s primary job to detect fraud, says witness

SINGAPORE — Nearly a year after audio-visual services firm Xtron Productions issued bonds to City Harvest Church, there were concerns about Xtron’s ability to redeem the bonds when they matured.

But Ms Tiang Yii, Xtron’s auditor at the time, was not aware of these concerns documented in emails among several of the six church leaders facing charges of misappropriating church funds, it emerged today (Jan 13) as the third leg of their trial kicked off.

The six accused are co-founder Kong Hee, his deputy Tan Ye Peng, investment manager Chew Eng Han (who has since left the church), former board member John Lam Leng Hung, former finance manager Serina Wee and finance manager Sharon Tan Shao Yuen

The six accused allegedly used S$24 million of church funds for sham bonds, then “round-tripped” another S$26.6 million to cover up the first amount. The church first transferred money to Xtron for the allegedly sham bonds in Aug 2007.

If the concerns about Xtron had surfaced, its financial assets might have needed to be written down, and on the church’s part as a bond subscriber, there would have been impairment and disclosure considerations, said Ms Tiang, who was auditing firm Baker Tilly’s lead partner for City Harvest Church from Jan 2006 to June 2007, and for Xtron in 2006 and 2007.

Taking the stand as a witness for the prosecution, Ms Tiang also told the court that it is not an auditor’s primary job to detect fraud, and that extra procedures as prescribed by financial reporting standards would be carried out only if there was evidence to suggested fictitious documents.

Ms Tiang also played down an internal Baker Tilly document that indicated its risk management committee’s concerns about City Harvest Church and Xtron. The document was sent in July 2008 before Baker Tilly had begun gathering audit evidence for the 2008 financial year, and the points were merely potential issues for the coming audit, she said.