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Tenbagger421
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CPA with majors in accounting and finance. I have 25 years experience as an auditor and have signed/certified over 300 audits. I have been investing in the stock market for over 30 years and was able to retire early thanks to it.
  • Everyday Is Independence Day For CPAs 0 comments
    May 31, 2013 1:56 PM | about stocks: LPIH

    The audited financial statements of Longwei Petroleum Investment Holding Limited (Longwei Petroleum or the Company) for the year ended June 30, 2012, was unqualified and certified as being correct before being submitted to the Public Company Accounting Oversight Board (PCAOB), an independent arm of the SEC. An unqualified report means that the financial statements were fairly stated in all material respects.

    Anderson Bradshaw PLLC, the Company's auditor, is a very well-respected firm with numerous public company clients. Needless to say, independence is the most important aspect of a Certified Public Accountant's responsibilities and it is plainly stated as such in the auditing standards. Without it, a CPA firm would be out of business in short order and would certainly not qualify to be a PCAOB auditor, which adheres to strict Sarbanes-Oxley requirements (Sarbanes-Oxley Act created the PCAOB).

    Audit standards require: 1) a confirmation of cash 2) confirmation of accounts receivable 3) on-site count of inventory 4) on-site observation of fixed assets and examination of supporting documentation and 5) a search for unrecorded liabilities. I am confident that Anderson Bradshaw performed all of those procedures as they have an office in Hong Kong, and of course, they are certified to tell the truth...their livelihood depends on it. Besides, being Mormons, they answer to a higher authority than the PCAOB, SEC, IRS, AICPA and the Utah State Board of Accountancy.

    Anderson Bradshaw's website includes Longwei Petroleum in "a small selection of the public entities that we are serving" (first link below under Company/Clients). They will again be conducting the Company's audit at the end of June. If there was anything wrong with the June 30, 2012 audit, it would have been re-issued by now, as required by the regulatory bodies and auditing standards. The second link, "PCAOB will gain access to Chinese audit documents", on their website, will give credibility to the thousands of legitimate Chinese businesses like Longwei Petroleum. The third link below shows that the firm had no disciplinary proceedings at the PCAOB.

    http://www.abcpas.net/

    http://www.iasplus.com/en/publications/us/heads-up/2013/heads-up-2014-sec-approves-pcaob-auditing-standard-on-communications-with-audit-committees

    https://rasr.pcaobus.org/Firms/FirmSummaryPublic.aspx?FirmID=3BF850E14E5600511E163B03701D0302

    That speaks volumes compared to a known short seller who: has been sued numerous times in the past for the same "short and distort" scheme, has no type of certification, does not have to answer to any regulatory body and whose "facts" are being challenged by the Company in a $242M plus defamation lawsuit. The jury trial only needs a simple majority and RICO violations equate to triple damages.

    Longwei Petroleum refuted each and every claim in a very plausible and forthright manner. It is now comical to watch the January 28, 2013 CCTV video of a duped reporter standing on the same weed-strewn railroad track that the Company says is not used by them.

    Longwei Petroleum is on Forbes Asia's 200 Best Under a Billion, out of 15,000 companies, and has been thriving in the same region for 17 years. The Company was approved by the Ministry of Commerce of the People's Republic of China. They hold licenses for transporting oil products in Shanxi province and throughout the Peoples Republic of China and buy most of their supplies from state-owned enterprises. These licenses are very difficult to obtain and usually involves paying "grease" to government officials, which gives the Company a virtual monopoly in their region. Finally, Shanxi province, where the Company is located, grew 13% in 2011 (the last year that figures were available for the June 30, 2012 audit) outpacing the rest of China by over 41%. That would be consistent with the Company's January 2, 2013 press release raising revenue guidance 31% year-over-year.

    http://www.forbes.com/asia200/list/#p_1_s_a0_l

    http://www.equities.com/news/headline-story?dt=2013-01-02&val=879924&cat=business

    Other companies have been victims of the same short seller. L & L Energy Inc.'s stock, for example, is recovering and they recently retained KPMG as their auditor to also list on the Taiwan Stock Exchange.

    http://finance.yahoo.com/news/l-l-selects-top-tier-100000784.html

    The integrity of one's source is the most fundamental principle of investing. This looks like a rare opportunity to let market hysteria lead to substantial gains.

    Disclosure: I am long OTC:LPIH.

    Stocks: LPIH
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