The Informatics affair 1

Informatics Holdings Ltd is a listed company which is one of the largest education providers in Singapore. One of its subsidiaries is Informatics Groups Singapore Pte Ltd (IGSPL). False accounting issues in relation to IGSPL's 2003 financial statements involved approved in principle revenue (AIP revenue) and international student recruitment revenue (ISRR).

AIP revenue involved student fees from local students. IGSPL has standing arrangements with financial institutions to provide loans to students for to finance their studies. It is not totally clear but it appears that the students only signed up with the school on the basis that their student fees would be paid through loans arranged by the school. The school here recogised revenue from student fees when the student was registered, rather than when approval for the student loans were obtained.

ISRR is revenue from foreign students studying in Singapore. Under Singapore law, each such student can only commence his studies after approval from the government body, Immigration and Checkpoints Authority (ICA). However, IGSPL recognised the revenue from these students even before approval had been obtained fro ICA. This was based on its past experience that

The above 2 accouting procedures adopted by IGSPL contradict the accounting principle that revenue from services should only be recognised when the service has been rendered to the customer.