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Accounting News Roundup: More Trouble for Chinese Companies; SCOTUS Won’t Hear Suit Against E&Y; LarsonAllen’s Latest Buy | 06.14.11

S.E.C. Seeks to Halt Sales of Stocks of 2 Chinese Companies [NYT]
Investigators say that China Intelligent Lighting and Electronics and China Century Dragon Media failed to disclose that their independent auditors had quit after questioning the accuracy of financial statements, according to separate orders released Monday. The S.E.C. is seeking a so-called stop order to keep the firms and shareholders from selling stock under the faulty statements, the agency said in a statement.

High Court Denies Suit Against E&Y Over Time-AOL Deal [Law360]
The U.S. Supreme Court on Monday declined to hear an appeal brought by an AOL Inc. investor alleging that Ernst & Young LLP approved tainted financial statements related to Time Warner Inc.’s merger with AOL. In rejecting the petition for certiorari, the high court dashed AOL investor Dominic Amorosa and co-petitioner attorney Christopher Gray’s claims that the Second Circuit failed to properly apply the Securities Litigation Uniform Standards Act of 1998 when it dismissed the fraud suit in February. The decision brings an end to 2003 suit claiming that Ernst & Young, the independent auditor for AOL, Time Warner and the merged company, engaged in fraud and abetted the companies’ fraud when it issued audited financial statements approving the companies’ allegedly faulty accounting.

The Importance of Being Audited [NYT]
When a company’s auditors resign and disclose that prior financial statements “should no longer be relied upon,” investors should head for the hills because there is a very good chance fraud has been discovered. Unfortunately if that company is a Chinese operation that obtained an American listing through a so-called reverse merger, then it is probably too late to salvage much if anything from the investment.

Candidate Johnson: I’d abolish the IRS [DMR]
“I think the biggest issue facing this country right now is that we are bankrupt and on the verge of a financial collapse,” Johnson told about 75 people at an Iowa Tea Party event at the Elks Lodge here. Johnson, who announced in April that he would seek the Republican nomination, predicted the nation’s financial troubles will be manifested in a bond market collapse. He vowed to fight for a balanced federal budget to avert such a calamity, adding he would replace federal personal and corporate income taxes with the so-called Fair Tax, in essence a national sales tax.

Iowa Senator Chuck Grassley “Clings Tightly” to His State’s Ethanol Subsidies [JDA]
As Adrienne might say, “WTFC?”

Is Green Mountain Coffee Roasters Fudging Its Reserve Numbers? [WCF]
Maybe! Or it’s simply that math isn’t someone’s strong suit.

LarsonAllen buys Seattle accounting firm [MBJ]
Lockitch Clements & Rice PS joins Club LA.

Posted in ANR