7 Chinese Companies with Dubious Auditors

In the recent Barron's article titled "Who's Minding the Minders of Chinese Accounting?", a total of 7 Chinese companies (including 4 C.O.P. companies) were singled out for having auditors that had, one way or another, raised a red flag with the PCAOB (Public Company Accounting Oversight Board). These companies were:

1) American Dairy (ADY)
2) China Precision Steel (CPSL)
3) China BAK Battery (CBAK)
4) China Clean Energy (CCGY.OB)
5) China Kangtai Cactus (CKGT.OB)
6) China Sky One Medical (CSKI.OB)
7) China Education Alliance (CEUA.OB)

Five of the above companies rely on external IR firms for their investors relations, and of these, four share the same IR firm. The firm that appears to have close relationships with dubious auditors is CCG, headed by Crocker Coulson. It serves CPSL, CCGY, CSKI and CEUA. ADY employs ICR and the other two have no outside help for IR.

Comments

[slim:]

That is old news. Anyone who is doing DD on any of these companies is already aware that most if not all have addressed their auditing questions. For example, a year ago, CKGT has delayed their revenue recognition to be very conservative (rev not accounted for until their customer's customer has sold the products). This is overly conservative in my view and they have actually carried out more sales than is currently being listed on the balance sheet. A whole new set of updated SEC documents based on this conservative revenue recongnition policy had been published last year and the company is growing strongly.

2008 Mar 03 02:01 PM

[merismus:]

I agree with Slim!!!

2008 Mar 25 09:28 PM

[rockoninthe...:]

Well......this has been taken care of.......CBAK is the real deal......they are doing everything well.......they now have a top echelon American auditing firm....

2008 Apr 25 01:53 PM

[audit man:]

CONSIDERING HOW US COMPANIES MANIPULATE THE INCOME STATEMENTS,AND ARE ONLY SUBJECT TO FINES,I'LL TRUST THE CHINESE WITH THEIR PUNISHMENT TO CROOKS ANYDAY. TRUSTING US AUDITORS IS LAUGHABLE.

Mar 11 10:34 PM