For those who are not accountants, let me add some clarification to Tonto's apparent misunderstanding of the difference between an AUDIT and a REVIEW.
1. A review is NOT the same thing as an audit. BDO was doing a special review of the CRIC key asset - real estate CD, not an audit of the financial or other aspects of GIFS. See the PRs and other company and BDO statements about it.
A review has different procedures, expectations and levels of certainty than an audit. Some reviews are more like management consulting assignments than they are financial analytical examineations. As the BDO and GIFS statements indicate, the problem behind the cessation of the relationship is not the CD validity, it is a disagreement over other matters. GIFS was not satisfied with the requirements demanded by BDO. Most likely, BDO felt it needed to make those demands.
Bottom Line: Buyer and Seller in this transaction are satisfied with the key asset's validity and valuation, and all indications are signatures are drying on the papers. Verification via PR is due very soon.
2. Because an audit was not done, Tonto's quoted SEC regulations regarding cessation of an auditor-client relationship do not apply. HOWEVER, BDO can still send such a letter to the SEC. It is simply not required.
Also, if such a letter is sent, questions will undoubtedly arise about why the relationship broke down. After outlining the situation to my accountant, he noted that the deal going through will more than offset any concern future investors or the SEC would have. He said, "Questions may be asked, but nothing should come it." My accountant also said, "BDO was probably covering it's ass in this...thinking about potential [real or perceived] exposure. All accountants have to do this."
3. Others here have referred to BDO as GIFS auditors. I hope this message helps people understand the difference.
And the adventure continues... |
