SINGAPORE (July 16): Best World International has finalised the scope of the expanded independent review ordered by Singapore Exchange Regulation (SGX RegCo).

In a filing late Monday night, Best World says the scope has been approved by SGX RegCo.

The review, to be undertaken by PwC, was first ordered four months ago after questions were raised by short sellers on the soundness of Best World’s business model in China.

See: SGX RegCo orders independent review of Best World by PwC to be expanded

Under the expanded scope of the review, PwC is to ascertain the facts and circumstances surrounding the establishment, appointment and business relationship with Changsha Best.

Best World had only acknowledged that the owner of Changsha Best, Koh Kim Chuan, is the brother in law of Best World’s co-chairman Dora Hoan. The relationship between Koh and Hoan was exposed by financial blog Valiant Varriors, using Facebook posts.

See: Best World admits owner of China import agent is CEO's brother-in-law

PwC is to also verify the sales to Changsha Best and other import agents used by Best World in China, if any, for the period from FY2015 to FY2018 under the export model.

The review is to determine if these transactions were on normal commercial terms and conducted at an arm’s length basis.

PwC is to also validate the cash received from sales in China, identify lapses in internal controls and corporate governance, listing rules and if so, suggest remedies.

As earlier required, the findings of the review is to be reported to SGX RegCo and not to Best World’s own board’s audit committee.

Trading of Best World shares have been suspended by SGX RegCo since May 9.  It last traded at $1.36.

See also: SGX RegCo suspends Best World amid fresh attacks by short sellers

Best World, which sells beauty and health products, had been reporting surging earnings from China.

In February this year, Best World’s share price hit a record of $3.25, up from just over $1.40 just one year prior.

That was when short seller Bonitas Research, followed Valiant Varriors, published critical reports on the company, backed by supposed actual visits to Best World’s offices in China.

See: Best World files defamation suit against short seller Bonitas; calls to lift trading halt following 1Q results release

On March 19, Best World announced the appointment of PwC as the independent reviewer.

The scope of work, defined in consultation with SGX RegCo, was to focus on the verify and validate the franchise operations and related cash generated by the sales. PwC is to also help identify potential weakness in internal controls.

See: Best World shares slide over 20% after weekend announcement of independent review