Exxe Group Inc (AXXA)

[dubz25]

Ever heard of luckin coffee? This was just last year. They were audited. There’s a long list of scams that fooled auditors. Here are the auditors saying, don’t blame us! But sure pretend that audits are the gospel. They are just one piece of evidence to confirm value. While rare, Auditors can be complicit in the scam or be fooled by the scam and either make the auditor’s report useless. But you’d rely on it. Saying later, “But they were audited?!?!?”

In case you don’t know how an audit works - I worked as a financial statement auditor for a number of years. They are big jobs and the first time takes a lot of work. Internal controls need to be established, documented and walked through with the auditor, beginning balances are audited as well. It’s like two audits in one because you can’t rely on end of year values if you can’t rely on beginning of year values. Right? Any how there are a lot of companies in this Holding Company that need to go through all of that. It’s not just one company and will be a huge undertaking. At the end of the day, the Auditor’s report is going to say something along the lines of, “the Financial Statements are the responsibility of management. Our responsibility is to state an opinion on those financial statements based on our audit which we believe provides a reasonable basis for that opinion.” There will still be a Going Concern disclosure and a long Notes Payable disclosure. These factors are far more alarming to me than the lack of an audit and yet they are standard disclosures.

All of this is to say that the risk that the business will fail is far higher than the risk that they are committing fraud. IMO

AXXA! Green Again

https://www.google.com/amp/s/www.wsj.com/amp/articles/ernst-young-says-it-isnt-responsible-for-luckin-coffees-accounting-misconduct-11594909084