re: #185 Dr Lizardo

There’s something sleazy going on and they don’t want get called on the carpet for it? Basically washing their hands of the whole affair, and saying, “Hey man, don’t look at us…we already quit!”

There are different levels of work that a public accounting firm does and each one has a different level of assurance regarding the presentation of the financial statements, compilation is the lowest level of assurance, that’s basically taking the clients numbers and formatting them into financials with no further review. Audit is the highest level of assurance. Bring a publicly traded company these guys have to have audits. Shady stuff does get through audits, note Enron for example, but mostly audits are pretty good.

A huge component of auditing is testing internal controls to make sure that controls are in place to minimize error and to prevent fraud and chicanery. I’m guessing that the internal controls are weak and not fixable or in such a shambles that the auditor could only offer an adverse opinion letter. Rather than have that occur they probably met with mgmt to try and solve the issue then decided to withdraw from the engagement. An audit letter that does not attest to full assurance is harmful to the audited entity.

During my time in public accounting we had one adverse opinion letter attached to reviewed, not audited, financials. The client withdrew from the engagement. This is very very rare.