From a friend of GC:
If you’ve got your own words of encouragement for this busy season for Deloitte, or your own firm, feel free to share. Or if you’re feeling creative send us your poster to share with the group.
From a friend of GC:
If you’ve got your own words of encouragement for this busy season for Deloitte, or your own firm, feel free to share. Or if you’re feeling creative send us your poster to share with the group.
On Monday, we reported on Longtop Financial Technologies was the latest Chinese company to have their CFO quit, auditor resign and be accused of being a massive fraud. This particular story was interesting as one of the reasons cited by Deloitte for dumping LFT included “the unlawful detention of DTT’s audit files.” These accusations were described in much more detail in Deloitte’s letter to the company’s audit committee that was filed with the SEC and you may even conclude that the staff were thisclose to being hos
We italicized and bolded the best part.
The Audit Committee
Longtop Financial Technologies Limited
No. 61 Wanghai Road, Xiamen Software Park
Xiamen, Fujian Province
People’s Republic of China
Attention: Mr. Thomas Gurnee, Chairman of the Audit CommitteeDear Sirs,
Longtop Financial Technologies Limited (the “Company”) and together with its subsidiaries (the “Group”)
Audit for the Year Ended 31 March 2011We hereby give you formal notice of our resignation as auditor of the Company.
Background and significant issues encountered by Deloitte Touche Tohmatsu CPA Ltd. (China) (“Deloitte”)
As part of the process for auditing the Company’s financial statements for the year ended 31 March 2011, we determined that, in regard to bank confirmations, it was appropriate to perform follow up visits to certain banks. These audit steps were recently performed and identified a number of very serious defects including: statements by bank staff that their bank had no record of certain transactions; confirmation replies previously received were said to be false; significant differences in deposit balances reported by the bank staff compared with the amounts identified in previously received confirmations (and in the books and records of the Group); and significant bank borrowings reported by bank staff not identified in previously received confirmations (and not recorded in the books and records of the Group).
In the light of this, a formal second round of bank confirmation was initiated on 17 May. Within hours however, as a result of intervention by the Company’s officials including the Chief Operating Officer, the confirmation process was stopped amid serious and troubling new developments including: calls to banks by the Company asserting that Deloitte was not their auditor; seizure by the Company’s staff of second round bank confirmation documentation on bank premises; threats to stop our staff leaving the Company premises unless they allowed the Company to retain our audit files then on the premises; and then seizure by the Company of certain of our working papers.
In that connection, we must insist that you promptly return our documents.
Then on 20 May the Chairman of the Company, Mr. Jia Xiao Gong called our Eastern Region Managing Partner, Mr. Paul Sin, and informed him in the course of their conversation that “there were fake revenue in the past so there were fake cash recorded on the books”. Mr. Jia did not answer when questioned as to the extent and duration of the discrepancies. When asked who was involved, Mr. Jia answered: “senior management”.
We bring these significant issues to your attention in the context of our responsibilities under Statement on Auditing Standards No. 99 “Consideration of Fraud in a Financial Statement Audit” issued by the American Institute of Certified Public Accountants.
Reasons for our resignation
The reasons for our resignation include: 1) the recently identified falsity of the Group’s financial records in relation to cash at bank and loan balances (and also now seemingly in the sales revenue); 2) the deliberate interference by the management in our audit process; and 3) the unlawful detention of our audit files. These recent developments undermine our ability to rely on the representations of the management which is an essential element of the audit process; hence our resignation.
Prior periods’ financial reports and our reports thereon
We have reached the conclusion that we are no longer able to place reliance on management representations in relation to prior period financial reports. Accordingly, we request that the Company take immediate steps to make the necessary 8-K filing to state that continuing reliance should no longer be placed on our audit reports on the previous financial statements and moreover that we decline to be associated with any of the Company’s financial communications during 2010 and 2011.
Our consent
We hereby consent to a copy of this letter being supplied to the SEC and the succeeding auditor to be appointed.
Section 10A of the Securities Exchange Act of 1934 (U.S.)
In our view, without providing any legal conclusion, the circumstances mentioned above could constitute illegal acts for purposes of Section 10A of the Securities Exchange Act of 1934. Accordingly, we remind the Board of its obligations under Section 10A of the Securities Exchange Act, including the notice requirements to the U.S. Securities and Exchange Commission. You may consider taking legal advice on this.
Yours faithfully,
/s/ Deloitte Touche Tohmatsu CPA Ltd.
c.c.: The Board of Directors
So around 12:30 this morning, as I checked BDO Canada’s website for any kind of […]
Deloitte officially rolled out its Talent Annuity Report today and before you start wondering just what the hell a Talent Annuity Report is, Barry Salzberg enlightens everyone:
We published a Talent Annuity Report because we regard our talen hat generates an annuity. We take pride in the contents of the report — it is a tangible manifestation of our passion and commitment to our talent. Our people are vital to the continued growth of our business, and we are focused on fostering a quality culture where everyone has the opportunity to reach their fullest potential.
Everything Dr. Phil says may in fact be true, however when we look at the report, we see a lot of indecipherable hexagons that may or may not be used to communicate this “passion and commitment to [Deloitte’s] talent.”
Fortunately, if you’re not too interested in navigating through the geometric maze, the press release manages to break down why it was such a bang-up year for the talent at Deloitte:
The report chronicles a year of bold talent initiatives and historical milestones including:
• Groundbreaking of Deloitte University, a $300 million state-of-the-art center established to foster personal and professional growth at Deloitte• Company-wide rollout of Mass Career Customization® , a career development model that enables all Deloitte professionals to dial up and dial down their careers to fit their needs at various life stages
• Launch of a voluntary sabbatical program for employees to take up to six months leave to engage in volunteering and other personal pursuits
• Presentation of Deloitte’s cutting-edge corporate lattice business strategy in a new book titled “The Corporate Lattice: Achieving High Performance in the Changing World of Work“
• Introduction of a customized approach to talent development with Deloitte professionals participating in 2.4 million learning hours
• Achievement of the 1000+ mark for women partners, principals and directors — a reflection of Deloitte’s hallmark Women’s Initiative and commitment to an inclusive environment.
• Recognition from more than a dozen national organizations, including the No.1 ranking on BusinessWeek’s “Best Places to Launch a Career” list
Whether or not spending $300 million to build the Deloitte frat house is worth it, is a matter of opinion.
As for BusinessWeek lists and whathaveyou, most employees understand that this perpetual conclusion is for marketing purposes and would be more than happy to take exception with it. As for the rest of the initiatives and milestones, you can take them for what they are worth.
But what’s especially interesting is the timing of this release. These non-monetary reasons are presumably supposed to serve as reminder of Deloitte’s commitment to employees. But since the report was issued in wake of the merit increases we saw last week, it’s almost if it’s meant to console employees after the relatively disappointing news. And if that is the case, it will fail miserably.
Deloitte Releases Talent Annuity Report [PR Newswire]