AUDITING company Isla Lipana & Co. said that it audited solely for Maria Francesca Tan Group of Companies, Inc. (MFT, Inc.) and did not provide services to the entity’s other subsidiaries.
“Let it be clear that only MFT, Inc. is our audit client. We would also like to point out that the MFT, Inc. and Foundry Ventures I, Inc. are two separate entities. Foundry Ventures and the MFT Inc.’s subsidiaries are not our clients,” Isla Lipana said in an e-mailed statement on Monday.
The statement was made in response to a criminal complaint filed by the Securities and Exchange Commission (SEC).
The firm also said that it will fully cooperate with the investigation by the Department of Justice (DoJ).
“During our firm’s more than 100 years of existence, we have remained steadfast in our integrity and professionalism, and strongly advocate for these values. We condemn, in no uncertain terms, the perpetration of fraud or bad faith against the public by any means,” it said.
On April 5, the SEC filed a criminal complaint with the DoJ against the MFT Group and Foundry Ventures for allegedly engaging in illegal investment activities.
The commission also implicated Isla Lipana in the complaint, saying that it served as the independent auditor of the MFT Group and Foundry Ventures for the fiscal years 2018 to 2021.
For MFT, the SEC cited violations of Sections 8, 26, and 28 of Republic Act No. 8799, also known as The Securities Regulation Code (SRC), in relation to Section 6 of Republic Act No. 10175, the Cybercrime Prevention Act, the SEC said.
The commission also charged MFT Group and Foundry Ventures with violations of Section 54.1 in relation to Section 54.2 of the SRC and Section 177 of Republic Act No. 11232, the Revised Corporation Code, and SRC Rule 68, in connection with material misrepresentations in their audited financial statements (AFS). — Revin Mikhael D. Ochave
“The filing of the criminal case stemmed from complaints submitted by several investors who participated in the investment scheme of the MFT Group, which later transitioned to Foundry Ventures,” the SEC said.
“The MFT Group allegedly promised guaranteed returns ranging from 12% to 18% of the amount they invested, which was considered as interest income. The scheme was perpetuated through the issuance of postdated checks reflecting a 1% to 1.5% monthly interest to interested investors, who were given either a promissory note or borrower-lender agreement, as proof of their investment,” the SEC added.
For Isla Lipana, the SEC said that the auditing company colluded with MFT Group on the entity’s financial reports.
“In relation to the misrepresentations in the MFT Group’s FS, the SEC found that Isla Lipana colluded with the MFT Group in their fraudulent activities by making it appear that the financial statements of the company were fairly presented despite inconsistencies and inaccuracies in the AFS,” the SEC said.
“Isla Lipana issued an unqualified opinion for the years 2020 and 2021, indicating that the AFS of the MFT Group are fairly presented in all material respects and in accordance with the identified financial reporting framework,” it added.
The commission previously issued a cease-and-desist order against MFT Group and Foundry Ventures. The order was made permanent on April 1. — Revin Mikhael D. Ochave