Trading in Touchwood Investments, a forest investment firm in Sri Lanka, is suspended pending release of interim accounts; company accused of failing to deliver promised returns, using 'fair value accounting' by including immature trees

SRI LANKA , March 12, 2014 () – Trading in Touchwood Investments Plc, a controversial forestry firm has been suspended pending the release of interim accounts, the Securities and Exchange Commission has said. Investors in the firm recently went to court seeking to liquidate it after it failed to give them promised returns.

The firm also used 'fair value' accounting, to show large profits.

Fair value accounting in general has been blamed for showing profits that are not actually generated but is simply inflation during bubble periods, and helping worsen asset price inflation and other effects of credit bubbles.

In Touchwood's case, immature tree growth was brought into the profit and loss account.

Analysts have warned about the promises of fixed returns made by forestry companies for over a decade (Green Blues) ( .

In 2007, Sri Lanka's accounting watchdog questioned its accounting practices, saying they were clearly unreliable (;-auditor-kpmg-on-the-mat/1364424869) , and the matter ended up in courts.

Later in the year its then auditors disclaimed the accounts (

Investors have lost money in forestry companies in many countries including India which prompted regulators to bring in rules.

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