A report in the FT on the attack on the accounts of Temenos by Hindenburg Research included this comment: Its probe “uncovered hallmarks of manipulated earnings and major accounting irregularities”, Hindenburg said. “This includes evidence of round-tripped revenue, sham partnerships, rampant pulling forward of contract renewals, backdated contracts, excessive capitalisation of seemingly non-existent R&D investments, and other classic accounting red flags,” it added.
That’s a good summary of what to look for at companies where accounting fraud is suspected and would have been relevant to investors in Globo.
Temenos denied the allegations and said: “The [Hindenburg] report contains factual inaccuracies and analytical errors, together with false and misleading allegations, which are intended to adversely impact the company’s share price”. That did not stop the share price from falling almost a third last week.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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