<< Well, considering they acquired Dicon AFTER the fiscal year R&H does NOT need to do an audit on Dicon. >>
The Dicon acquisition was a material subsequent event for Spongetech and the outside auditors are required under Sarbanes Oxley to visit the company and kick the tires. Like I said, they're not going to perform an audit on Dicon -- yet -- but they're absolutely going to visit the company and perform a number of tests that are time-consuming and tedious.
They'll review the books to see how Dicon is accounting for its fixed assets, among other things. Remember, Dicon has more fixed assets than Spongetech has. So the auditors will want to know that Dicon is doing an okay job in accounting for the depreciation of those assets and in a manner that complies with GAAP.
Moreover, they're going to test for internal controls at the company. They'll absolutely review bank account statements and will send out confirmation letters related thereto on Dicon; they'll review the company for compliance with environmental laws and will make an assessment of contingent liability related thereto; they're also going to review Dicon's payroll, A/P and A/R balances and all kinds of other stuff.
And remember that Dicon is a one-woman shop accounting-wise, so she's got her hands full.
And all of this has to be done PRIOR to the release of the 10-K -- but just kick back and wait and see.
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