Replies to post #64739 on China Growth Stocks

[Michael Anderson]

What makes you say that they are a quality auditor? Is it because they are reviewed by the PCAOB? I think that would be a lack of reasoning as not being reviewed by the PCAOB, doesnt show much.

He went out of his way to link Bodisen Biotech with Kabani and conclude Kabani is bad for us investors. Kabani didn't do anything wrong with Bodisen or LLEN.

How do you know this if you stated that you have not even done any research on the Biodesen Biotech case.

Rato makes a very good argument against the auditor and there isnt much showing that he is incorrect. It has nothing to do with feeding the bears, it has to do with looking at the different variables and not leaving the blinders on to issues with in the sector. The more quickly we can pick through the real negativity within these companies, auditors, etc, the closer we will be to overall positivity.

[ccsykes]

You guys are making to much of an issue with auditors.

An audit firm is ranked by the number of clients, not quality. KPMG paid out $456M in criminal violations in 2007. Deloitte settled for $50M in 2005 for not detecting a fraud. Ernest and Young was just recently accused of hiding Leham Brothers financial problems. PwC has been acused of fraud on several occasions as well. Lets not forget Arthur Anderson who was #1.

Fact is, fraud is going to happen no matter who the auditor is. What is important isn't the number of clients a firm has (its ranking) but more importantly its past PCAOB inspections.

You guys really shouldn't put so much emphasis on auditor rankings. Audit manangers come and go at larger firms as they seek out career oppritunities, ussually with smaller firms that they have a better shot of becoming partner. Most your staff at larger firms also have less experience overall and there is a high turn over rate. Your best auditors leave the large firms to seek out partnerships in smaller firms. Most auditors I have known don't care too much for the corporate politics.

The ONLY reason a top 10 auditor is in some cases better is the Corporate experience of the director level individuals. They tend to have a larger pool of experience at the top, but for most of these small cap companies, those individuals probably never even see the audits of these Companies. They are too busy finding ways to cover up for the big wall street boys.