DD Support Board and Research Team

[loanranger]

You probably wouldn't be surprised if I were to tell you that there's a bit more to the story than Mr. Shaw is telling us in that paragraph.

As I understand it the audit firm in question merged with the companies previous auditor. They then used that prior auditor to lead the new audits, which were the fifth and sixth (I think I have that right...it may have been the 6th and 7th) sequential audits, in violation of the PCAOB's independence-related rules, which limits a lead auditor to 5 years in a row. So the opinions for the last couple audits were NG and the company had to file a non-reliance 8-K.

Tauriga doesn't do much in terms of business activity (SURPRISE!!!) and the carrot they are hanging in front of investors is its expectation of a $3,000,000 (or more) judgment in a court case it has brought against the audit firm.

Here's my question:
Does a company's audit committee (in this case I think the full board served that purpose) not have an obligation to be aware of the PCAOB rules regarding auditor independence, including the requirement for an auditor to provide an "independence letter" describing any potential independence issues? They couldn't possibly deny an awareness that the lead auditor had continued in that position beyond 5 years, all the audits being conducted under their noses.


(It seems obvious to me that the continuity was intentional on the part of Tauriga and not just a happy coincidence, but I'm more curious at this point as to what obligation an issuer has to know the PCAOB independence requirements.)