China Yuchai International Ltd., a Singapore-basedmanufacturer of diesel engines for the Chinese market that is traded on the NewYork Stock Exchange, has agreed to the entry of an administrative order fromthe U.S. Securities and Exchange Commission to resolve an informal inquiryregarding the restatement of its 2005 financial statements.

The 2008 restatement corrected errors relating to anoverstatement of the firm's income, primarily due to an understatement ofaccounts payable of approximately 170 million renminbi ($21 million) by asubsidiary, Guangxi Yuchai Machinery Co. Ltd., which the SEC order says arosefrom "inadequate financial controls."

In 2007, the company announced an inquiry into theadjustment by independent independent counsel and independent forensicconsultants, which reported in 2008 no indication of fraud or intentionalwrongdoing. The investigation did, however, identity certain internal controlissues; the company's audit committee made a number of recommendations to tocorrect these, which the company said were implemented at the direction of itsboard starting in 2008.

The administrative order enjoins the company fromviolating federal securities laws and SEC rules; it involves no fines ormonetary penalties. The company consented to the order without admitting ordenying any of its findings.

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