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I'm a CPA. This issue is between the attorneys involved. Its on a case-by-case basis. The SEC is reasonable, it's based on facts and circumstances.
Handled several Wells in regard to GAAP and internal control issues. Very detailed.
And the IRS 1120, due Feb 15th. Plus states and NYC. I wonder if Mosky paid the taxes due with the extension (Aug 15th) or is paying tax (plus penalities and interest) with the Feb 15th filing.
Impossible to bounce one here. No checks allowed.
Forgot Dicon's July 9th Balance Sheet Audit, promised the SEC "by Sept 23rd", Per Mosky's July 8k. That balance sheet would be very interesting.
ANY 10k would have a detailed footnote about the Wells Notice problems. It's a subsequent event that has a material and significant impact on the company, thus needs disclosure.
Close to 400,000 shares. Pretty easy too.
Absolutely NONE. Except to fire them.
That would be great. Then the specific charges and likely outcome would be disclosed in the footnotes and auditor's opinion letter. The litigation Footnote will be quite revealing, R&H just needs all the Attorneys' letters from all the lawyers engaged
SOP, just ride the "coat-tails"
But not the specific charges
Audit Risk Alert - 10s of millions on a handshake agreement. Thats what I call a major management internal control. As a shareholder I just feel so good all over. I can't wait the hear the details on WHY Dicon needed a $250,000 line of credit after advancing $10 to $20 Million between Feb 28th and and July 9th.
I'll bet Mosky's internal auditing team and one man Audit Committee were all over that handshake agreement. So much to be thankful for, a stock promoter doing handshake deals. I wonder if the SEC reviewed the related PR and 8K, to determine if internal controls were lacking in the control of the cash advanced to Dicon. I always wondered if there was a subsequent cover-up of the missing cash and inventory. Just wondering, because the $250,000 makes no sense. Never did find out exactly what was on the Dicon Balance Sheet that was purchased.
Just my opinion, but I'll bet the one man Auditing Committee was all over that transaction. The SPNG assets are safe. WHY???? The internal controls, of course.
Yeah maybe the 10K is wrong.
Wow outsourcing the accounting function. So I guess that makes it an "outside control", not an "internal control". I'm sure SOX has never addressed "outside controls".
WOW 3 full-time employees.
WOW 24 part-timers.
WOW no audit committee
WOW no CFO with any kind of accounting/auditing/SEC experience.
WOW the CFO is a professional stock promoter.
I'll bet the SEC feels good all over. Yeah i can hear mosky telling the investigators "It's ALLLLLLLLL Good fellows".
Yeah maybe the 10K is misleading in this area too. Wouldn't surprise me.
Yeah simply a cut and paste. Nice job but hoping for opinion connecting the dots of the actual company PRs, 8Ks and the 10s to the reported regs. Now that would be an awesome job, but a bit much.
It was a cut and paste, pure and simple. Any very well done too.
A very misunderstood aspect of accounting and the related auditing impact. A company this size CAN NOT have effective traditional internal controls, which an outside auditor can rely on in addressing various auditing approaches and techniques. Most small compnies (with limited employees) have personnel wearing several hats. Therefore the auditors assume no internal controls and plan accordingly. There are usually three charactistics of effective internal controls; segregation of duties, restricted asscess and supervision. This is the case for SPNG and many other companies of this size. The SEC is not worried about this company limitation. I believe this was the issue between NAZ and 2002 SOX regulations. This should not be a problem in 2010. (A Fortune 500 company - YES, a very serious problem.)
The SEC is concerned about the "no Audit Committee" issue and the commingling of funds between RME and SPNG. The accounting staff is the same for both companies. And the intercompany transactions are a real issue, along with the various duties of all employees of the two entities.
A timeframe????? An audit committee, maybe 1 month; and a real CFO and an experienced accountant and several clerks, maybe three months. Hope this helps.
Its standard US government BS. In order to respond, one has to know the specific charges. Same with the IRS, DOJ and whatever.
Maybe they change the regs. and it's a guessing contest now.
Nice job on the research patch. It was simply a "cut and paste". Right???? Or did you have personal comments, in the report????
Very specific as to the alleged violations. Actual violations (time, place and action) and/or KNOWLEDGE of the actual violation.
It's the findings of the investigation. It could have been documented weeks ago and the notice refers to this prior documentation. Either way, Mr and Mrs know the specific alleged violations.
Normal shareholders will know the investigation findings very shortly. The sooner the better.
What part didn't you understand????
"If he resigned, or didn't, from the Mutt Bros, it doesn't really matter. He's not the issue. There is no Audit Committee. End of story.",
Frank is not the issue, IMO. The issue is "What does a CPA (and his legal counsel) do when there is no Audit Committee, and he discovers senior management fraud in a re-audit, in which investors and creditors relied on the original audit"?
The audit came to a complete halt. Everything in that Wells Notice has to be disclosed in the 10K. Or everything in the investigation, if you like. There is not an CPA in the world that would issue an opinion, with this hanging over their heads. It was simply "Give us a call Mosky when this issue is resolved". SOP for accounting firms, same with attorneys and their attorneys' letters.
Both of these professional are withholding their opinion letters until this investigation is over.
"what did they know and when did they know it" is the key to where R&H stands in this whole mess.
I hope this helps, if not, so be it.
This audit is not your ordinary everyday audit. It's a reaudit. The first audit was relied on by investors and creditors. If you were R&H's counsel, I'm sure you would want to cover all bases. And there's nothing stopping them. AU 316 clearly states that they can cover their azzes any way they want, as long as it's based on sound legal advice.
The Audit Committee is a form of INTERNAL CONTROL, but not in a tradional sense of accounting controls. I believe a "internal control" problem was clearly addressed in the Wells Notice.
The ARA (Audit Risk Alerts, I think) pinpoints this exact problem. Ineffective Audit Committees that are not independent and have no financial expert. IMO the primary reason for D&T resigning. Mosky promised corrective action, but nothing happened.
In addition, I believe (JMO) the investigators considered RME and SPNG as one entity and the internal controls were lacking for intercompany transactions. This would be my approach in addressing the various investigation issues.
If he resigned, or didn't, from the Mutt Bros, it doesn't really matter. He's not the issue. There is no Audit Committee. End of story.
Your understanding of some the options available to R&H is perfectly correct. Except the AICPA doesn't control here, SOX does because it's a publicly traded company.
Under SOX, R&H reports to the audit committee. There's no audit committee. Based on "what did they know and when did they know it", what are R&H's options under AU 316??? I should really say, what are their outside counsel's options??? Knowing full well outside parties relied on previously issued "clean opinions". How does R&H cover their azz??
And this I can tell you with 100% certainty, (1) NONE of the audits are finished, and (2) THEY'RE NOT LEGAL EXPERTS. R&H relies on the SPNG attorneys for all legal matters in audited reports/filings. "Attorneys' Letters" cover this audit procedure.
In either case, the Audit Committee is not independent. R&H is aware of this, and as such, AU 316 allows them to do exactly as their outside legal counsel advises, regarding fraud reporting.
And their legal counsel is well aware of the effect of "US vs Naselli" on the CPA profession. A Peat Marwick partner got 5 years, and more surprisingly, the audit manager got one year. SOX, via the OCAOB, tried to make it easier for the CPA firms to deal with fraud, by requiring INDEPENDENT Audit Committees.
I'm willing to bet Franky resigned months ago.
Are u serious???? 8 pizza shops
Frank's not exactly independent. Ergo No Audit Committee because he can not exercise adequate oversight.
SPNG has no Audit Committee. Maybe an ineffective one, but not a real one per SOX. Investigators, I'm sure they have noticed this little oversite. The committee's "financial expert" must understand GAAP and have experience in the preparation of financial statements and/or auditing of the same.
Frank makes pizzas.
AU Section 316 "Consideration of Fraud in a Financial Statement Audit" Para 82.
Attorneys have a major duty to shareholders and are key to 10K filings. ALL attorneys rendering services to any company under audit, MUST sign-off on the audited financial statements in regards to the litigation footnotes and related disclosures concerning any and all legal matters. No exceptions. Attorneys hate this little requirement, but Wall Street demands it. Why??? Because CPAs are not legal experts.
OCAOB Auditing Update (AU)316 para .82 (a) fn39 in particular.
Since R&H is a registered firm with the OCAOB, it must adhere to OCAOB audit guidelines, but not to the extent that the CPA firms endangers its menbers, families, employees and whatever. The key phrase is "The auditor should recognize, however, that in the following circumstancesa a DUTY to disclose to parties outside the entity may exist."
The circumstances present in SPNG are key, in that there is no Audit Committee to report to. Just management. So reporting management fraud to management is pretty silly, and leaves the door open for a major lawsuit against the firm. If the firm's legal counsel advises disclosure to outside parties, then the OCAOB will "stand down".
It's interesting to note that under SOX, publicly traded companies must have an Audit Committee, with at least one member an accounting/auditing expert. SPNG has no Audit Committee.
And your point??????
IF R&H has issued their "opinion letter" (and thats a big IF), then Mosky would have been informed on New Years Eve the "opinion letter" was invalid, based on a material and significant subsequent event, that being the Wells Notice.
Mosky is very limited as to the public disclosure of the SPNG Financial statements.
Wrong. CPA firms follow PCAOB AU Section 316 regarding fraud. As usual, its clear as mud but as long as a CPA follows advice from legal counsel, he can overcome the ethical and legal obligations of client matters. Considering R&H was once dismissed it appears to be a "no-brainer" that he could do anything under the circumstances. Throw in Section 10A(b)1 of the 34 Act and the chilling effects of "US vs Naselli" and the PCAOB will "stand down". Bottom line - They can do anything they damn well please under the circumstances. Shareholders will know shortly, one way or the other.
Just tell Mosky to release the 10Ks and 10Qs, and no one gets hurt. Maybe a SH letter with the OS, status of the investigation and a sunmmary BS and IS. And get that Audit Committee started, he'll need it for the Naz.
Could be Billions right littlefish????
PS: How many employees does this company have?
LOLOLOLOLOLOLOLOL
HEY - I resemble that 5636783. I'm not credible.