So I was surprised when they accepted the audit assignment. After all my views about Universal Travel are well known. I even asked how we would test whether the $43 million stated cash balance at NYSE:UTA was really there.
The auditor asked the same question. Here is the key section from the auditor-departs 8K filing.
The following reportable disagreements occurred within the period from Windes' engagement through the date of its resignation, which if not resolved to the satisfaction of Windes, would have caused it to make a reference to the subject matter of the disagreements in connection with its report.
Windes had informed the Company in its resignation letter that it was no longer able to complete the audit process. Windes stated this was due in part to Management and/or the Audit Committee being non-responsive, unwilling or reluctant to proceed in good faith and imposing scope limitations on Windes' audit procedures.
Windes also stated that Windes had lost confidence in the Board of Directors' and the Audit Committee's commitment to sound corporate governance and reliable financial reporting.So the auditor wanted to check balances (presumably though I am guessing - cash balances) and considered the procedures the company wanted to use to confirm the balances "suspicious". Moreover management were unwilling or reluctant to proceed in good faith and imposed limits on what Windes can do.
Prior to its resignation, Windes raised the following issues (some of which may be considered to be disagreements) encountered during the audit, including issues related to the authenticity of confirmations, a loss of confidence in confirmation procedures carried out under circumstances which Windes believed to be suspicious; issues concerning the lack of evidence of certain tour package contracts and related cash payments.
Universal Travel is going through the circus of finding another auditor - their sixth. You could see through this company from a couch in Bronte or from a desk at the NYSE or any SEC office. Everything that I did to demonstrate problems with this company could be done without visiting China - and yet the stock was never suspended, kicked to the Pink Sheets or anything else. Nah - the NYSE kept collecting listing fees.
The NYSE it seems has no concern for its reputation.
It is not as bad as Singapore (where prospectuses for fraudulent Chinese companies were handed out in shopping centers) but hey - what is this - a race to the bottom?
John
8 comments:
Is the last comment true, where they handed out prospectus at shopping malls?
As they would say Stateside, "kicking ass and taking names"...
As I would say, "jolly good show, well done"...
By my count 3 for 3 in the last couple of weeks; an amazing hit rate.
However, as for "The NYSE it seems has no concern for its reputation", I am not sure I follow.
Are you saying that companies WON'T list on the NYSE because they won't kick you onto the pink sheets despite egregious corporate governance behaviour???
Surely the opposite.
NYSE is demonstrating that they will give the company the benefit of the doubt until the evidence is overwhelming.
Potential listing companies must LOVE that!
The only possible downside is to potential investors, to which "caveat emptor" is the perennial get out of jail free card.
Yes. They were doing it well into the S-Chips blowing up.
You could go to raffles place and get your prospectus hot off the press.
John,
what is wrong with handling out prospectus at shopping malls?
BTW, the reputable audit firms have wised up and are confirming cash balance with bank HQ instead of bank branch office.
Also, HKex is just as corrupt as SGX, yet you didn't tear into HKex, any particular reason?
Hong Kong is bad - but not as bad at SGX. Its at least got some easily identifiable reasonable Chinese listings.
But hey - we might be talking minor distinctions here.
When Jim Chanos said that he did not need to go to China - because he had not been to Enron either it was obvious enough what he meant.
J
John - any prediction with CCME? I'm pretty disappointed in Nasdaq to keep this halted and listed. Hopefully they will get the boot sometime this month.
Actually, EVERY IPO on the SGX hands out their prospectuses at Raffles Place. It's not just the s-chips.
So i'm not sure if the comparison means anything at all.
Just a quick note, based on an itch from my auditing days, the confirmation procedures might have been related to testing for Accounts receivable, payables, or debt, in addition to cash.
....i dont know what all was there, as i've never looked at any of their FS.
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