China MediaExpress Holdings, Inc. (fka CCME)

[Seawave7]

CCME - from Auditor's Perspective

I thought I'd share my post on YMB here....
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After Wctbills’ videos confirming the various ads both local and international brands, the airport buses; it seems the bashers now are trying to redirect attention to questioning the balance sheet / financials. From working very closely with the corporate controller of a NASDAQ-listed US mid-cap company and regularly interacting directly with PwC's auditors (one of the Big 4 like DT), I’ll provide some thoughts / answers to shorts' claim:

- *CCME’s auditor: Deloitte Touche Tohmatsu (DTT) is different from Deloitte Touche (DT) the Big 4 auditor*. Just Google “Deloitte Touche Tohmatsu”, it will bring you to www.deloitte.com. As DTT carries the DT name, by default DTT has to adhere to DT’s worldwide standard of accounting practices. Just like buying classic Coke, we expect the exact same taste anywhere in the world. Departure from this means disaster for the parent company. It is in DT’s interests to keep all companies under its umbrella to uphold the same standard. To me, this DTT vs. DT argument is so pathetic attempt from BEA/seesaw.

- *CCME’s balance sheet is not real*. First of all, DTT would not provide certification of financial statements without rigorous audits, checks and balances, cross-references. The process of certification is ‘painful’ for the company being audited. The auditor sends a team of auditors which verifies bank statements, invoices, contracts, etc. They talk to people across company, from the lowest level accountant to the CFO; compare numbers, do spot checks, analyze trends on various accounts and do peer-comparison in the industry to detect any anomalies.
When a company’s management attempts to change certain accounting practice (such as aggressively recognize revenue in advance, or hide expenses on the balance sheet); auditors will raise red flag to the Board of Directors. In CCME’s case, Dorothy Dong is Starr’s rep on the Board. From her profile, she definitely is not the clueless type; in fact she was in private equity and investment banking businesses before. She knows financials well.
Certification is done once a year (10-K filing) but audit process is done EVERY single quarter by the auditor. See my other post on this a few months back.

http://messages.finance.yahoo.com/Stocks...

- Shorts have to ask themselves, if CCME planned to fraud investor, why would it replace a no-name auditor (AJR - the previous auditor) with a more costly, stringent Big 4?

- From DT's perspective; being caught in audit shenanigans is definitely the last thing they want to happen. Not only regulators will chase after DT but also tens of thousands clients would bail when trust is breached, not to mention lawsuits. Trust is their main assets. Remember what happened to Arthur Andersen? Do you think DT would risk it just for one small client? I’m sure they are not as foolish as some shorts suggested.

- In fact, having DTT as their auditor is the most critical piece of information for me to make my investment in CCME. Other information: Starr’s investment, GH analysts' DD, Jacky’s buying shares, dividend plan, acquiring Apple, Nike as customers, etc. are all GREAT icing on a very delicious CCME cake. The short interest / RegSHO is the candle to top it all off (for shorts, actually it’s a dynamite ready to blow up big time).

Given the upcoming day13 RegSHO impact, I expect that there will be more shorts posting accusations / innuendo on CCME’s financials. Desperate moves, may I say.

Then again, bottom line is: who should we trust more: DT, GH, Northland Securities, Starr, insider owner, Forbes, IBD –OR- anonymous bashers??? You decide with your money. GLTA.