1.

Executive summary
In 2011, Vietnam stock market witnessed many security companies suffering losses,
withdrawing from brokerage activities or even being withdrawn the business license.
One of the causes leading to the situation is the violations in terms of accounting.
Within the scope of the Financial Accounting course, in order to better understand the
principles of accounting, SME securities was selected for study. This is a classic case
of a securities firm went bankrupt due to the breach of management as well as in terms
of accounting. This research will focus on two aspects mentioned above.

2.3. Misconducts in Accounting Principles and Professional ethics

Looking at the Financial Reports in 2011, we can see a lot of misconducts in
accounting principles and professional ethics.
First of all, Q3/2011 financial report showed that “Cash & Cash equivalents” item has
a total of 67.3 billion (of which 88% is Cash equivalents). However, this “Cash
equivalents” item originally belonged to the “Short-term financial investments” item
and it was “unpurposely” posted in “Cash equivalents”. So it can be derived that SME
violated the concept of reliability because it made investors misunderstand that the
company had a large amount of liquid assets.
Secondly, at the end of Q3/2011 the “Short-term receivable” item accounted for more
than 90% of total assets (of which 85% is “Other short-term receivable”). It is
interesting to note that Q3 financial report did not have detailed captions for this item.
Looking at the “Short-term payable” item we can see the similar situation where
“Other short-term payable” contributed for nearly 98% and there was no explanation
for this item. Hence SME generally failed to fully disclose information that make a
difference to financial statement users.
Moreover, the item “Short-term financial investments” at the end of Q3/2011 is 53.7
billion; comprising 59.5 billion initial investment and financial provision is 5.8 billion.
However, only 15% of the investment is in listed securities and the other is in unlisted
stocks. It should be noted that the provision has only been taken up for investments in
listed securities. In addition, SME completely did not have the provision for the item
“Long-term financial investments”. So we can see that SME extremely violated the
conservatism concept because these investments without provision would bring a great
risk for the financial position of the company.