July 23, 2018

China MediaExpress CEO Responds to Fraud Allegations by Falling Back on ‘Reputable and Well-Known Auditors’

For anyone out there concerned about Chinese companies who have less-than solid accounting practices, you can rest easy, as Gary Weiss reported in his TheStreet.com column yesterday:

All you have to do is believe in the infallibility of Big Four auditors!


Case in point, China MediaExpress Holdings is the latest company who hasn’t convinced everyone that their numbers are kosher, so their CEO, Zheng Cheng, went on the offensive:

Responding to allegations that the company is a “fraud and reported revenue is exaggerated by tens of millions of dollars,” China Media’s CEO Zheng Cheng said in a letter to shareholders: “The company is strong and doing well. Its revenues and cash position have been audited by reputable and well-known auditors who have confirmed both.” [Emphasis is GW’s.]

Those ‘reputable and well-known auditors’ just happen to be Deloitte, thankyouverymuch. Don’t think for a minute that we were dealing with Frazer Frost or some other firm that has had problems.

With China Small-Caps, It’s Shorts vs. Auditors [The Street]

For anyone out there concerned about Chinese companies who have less-than solid accounting practices, you can rest easy, as Gary Weiss reported in his TheStreet.com column yesterday:

All you have to do is believe in the infallibility of Big Four auditors!


Case in point, China MediaExpress Holdings is the latest company who hasn’t convinced everyone that their numbers are kosher, so their CEO, Zheng Cheng, went on the offensive:

Responding to allegations that the company is a “fraud and reported revenue is exaggerated by tens of millions of dollars,” China Media’s CEO Zheng Cheng said in a letter to shareholders: “The company is strong and doing well. Its revenues and cash position have been audited by reputable and well-known auditors who have confirmed both.” [Emphasis is GW’s.]

Those ‘reputable and well-known auditors’ just happen to be Deloitte, thankyouverymuch. Don’t think for a minute that we were dealing with Frazer Frost or some other firm that has had problems.

With China Small-Caps, It’s Shorts vs. Auditors [The Street]

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SHOCKER: Doesn’t Appear that Stanford Auditors were Doing Any Auditing

allen-stanford_1018295c.jpgLast week’s indictment of Allen Stanford has brought up the always popular question when fraud, occurs: “Who are the auditors that were asleep at the wheel of this disaster?”
Well, in this case, the auditors were a local UK two-person shop, CAS Hewlett, which must be Queen’s English for Friehling & Horowitz.
It doesn’t appear that CAS Hewlett has a website, but they’ve been doing the Stanford “audits” for at least 10 years, so obv they’re legit. PwC and KPMG both have offices on Antigua but Stanford preferred to stay with its “trusted firm”. Totally understandable.
And the best part? The founder of the firm, Charlesworth “Shelly” Hewlett died in January, approximately a month before the story broke on the Ponz de Stanford.
This all adds up to who-the-fuck-knows if audits were even occurring and for us to speculate if Shelly needed to get got because Stan knew that the poo and fan were coming together. Just sayin’.

Deloitte: Folding Like a Cheap Lawn Chair?

deloitte.jpgIs it possible that the spinelessness of the FASB is spreading some of the firms?
Motely Foley is reporting that MGM Mirage got the Big D to drop the going concern language from its “financial assessment” which we confirmed with the author, Bob Steyer, that indeed meant the audit opinion.
Doing a little digging on this whole sitch, we found that MGM has done some duct tape repairs to its balance sheet in order to convince its banks and Big D that nothing is fucked.
Deloitte, wanting to be troopers and all, probably just had to step back from the whole thing to get perspective. “Yeah, when you look at it from back here, $14.4 Billion in debt doesn’t really look that bad.”

MGM Back From the Brink — for Now
[Motley Fool]