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There's a lot at stake here. One of the darlings of the investing community has been "tainted". Was KPMG being too harsh? I did not write on this because there's so many unknowns and I am not privy to so many things. Is it just a verification failure?

I looked through the figures as I am not a keen follower of the company in the first place. A few things popped up. Then a good friend sent me this link. A quite insightful forensic overview of the accounts. To be honest I got the first few pointers myself from perusing the statements, but the writer went much deeper. It is a worthy read.

This teaches us the importance of accounting for investing purposes. There are layers and layers of reality within the figures. 

The two main things:

a) how can a company with size of growth in revenues such as SD have such an "excellently consistent" profit margin at 18%? A definite red flag.

b) the negative free cash flows over the years do not jive with net profits over the years

The rest you can read from the link.

So I am inclined to think there is justification more for KPMG to question here as the "receivables" seems to warrant further clarification.


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