As a follow on to our earlier post on some of the audit implications from the Sino Forest saga (or perhaps our earlier comments were a hoax from the SEC...!!), our attention was drawn to an article in the NY Times which also used this case to consider various issues impacting the audit process. The full article can be accessed here.
Among the Times' comments:
"Investors trying to decide whether to believe the Muddy Waters report, with its detailed assertion that the company's claims are contradicted by Chinese records, would love to know just what Ernst did check. What records did it inspect? Which tree plantations did it visit? Who did the work? Was it people from Ernst's Toronto office, which signed the report, or people from a Chinese affiliate? How many auditors did the work, over what period of time?
Ernst's report does not say, which is no surprise. Virtually every audit opinion in the world says almost the same thing, with no details about the company being audited."
The article continues with more comments as to whether the scope and procedures of the audit should be more transparent - an interesting read.
Hedge Fund Operational Due DIligence
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