Hyperdynamics Corp (HDYNQ)

[Rule_62]

I don't recall them saying that problems with internal controls was the reason for their withdrawal. The reason more likely has to do with not associating themselves with dubious firms. When they signed up, HDY was working to build a reputation as a reputable firm. Right now that reputation is murky at best. Deloitte is a firm that values their own reputation and they do not want their name tied to questionable companies. Their motive? simply to protect the class of customer they attract and protect the billing rate that reputation supports.

Perhaps some of the high flying legal firms will be next. Oh no, wait. They have no reputation and prey off the very situation they created. $4.8M legal bill last quarter. Ouch.

BTW the problems with internal controls as reported in the HDY annual reports dates back to 2007-2009. Strangely enough, the same period of time that the US embassy was voicing serious concerns about HDY over possible FCPA violations. It may well stem from the period of time dating to 2005 when Kent Watts was CEO and CFO and then conducted the appraisals of internal controls. Not like that presented a questionable scenario, right? Spend the money, sign the cheques, then rubber stamp it as business as usual.

There was also a problem flagged in 2012, but as stated in the PR, that had to do with "because of a material weakness related to oversight and review of financial information in the area of income taxes" and was not identified as the reason for the departure. In fact the PR goes on to state

"During the years ended June 30, 2013 and 2012, and the subsequent interim periods, there were no disagreements between the Company and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure"