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Deloitte Resigns as China MediaExpress Auditor; CFO Quits

Posted on by Caleb Newquist

In the wake of Roddy Boyd’s epic post from March 11th, China MediaExpress announced some bad news today – Deloitte resigned as their auditor effective Friday and as a result the company’s CFO, Jacky Lam, quit yesterday:

China’s largest television advertising operator on inter-city and airport express buses, today announced that the Company’s registered independent accounting firm, Deloitte Touche Tohmatsu (“DTT”) has formally resigned its engagement by the Company as of March 11, 2011. Following the receipt of the DTT resignation letter, on March 13, 2011, the Company received notice of the resignation of Jacky Lam from his position as Chief Financial Officer and director of the Company, effective immediately. As a result, CME will delay its fourth quarter earnings release and will not file its Form 10-K for the fiscal year ended December 31, 2010 by March 16, 2011, its original due date.

As you might have already guessed, Deloitte got spooked after all the fraud talk and they also came to the conclusion that management couldn’t be trusted (even if he did say great things about them):

The DTT resignation letter stated that DTT was no longer able to rely on the representations of management, and recommended that certain issues encountered during the audit be addressed by an independent investigation. DTT’s letter also stated that these issues may have adverse implications for the prior periods’ financial reports and that, in their view, further investigatory procedures would be required to determine whether the prior periods’ financial reports are reliable. Upon receipt of the formal DTT resignation letter, the Company requested the suspension of trading in the Company’s common stock on the NASDAQ Global Market to permit full disclosure of DTT’s resignation to be disseminated to the public.

So the company now needs a new auditor and a new CFO. Of course you’ll have to work around forensic accountants and a bunch of lawyers that will be helping the company through this little hiccough but otherwise, this should be a snap.

Earlier:
Apparently ‘The Purpose of Auditors Is Completely, Entirely, and Wholly’ to Look for Fraud and ‘Deloitte is the best. Period. End of Statement.’

Related Posts

How Would You Vote on the Deloitte Leadership Candidates?

Last month, we shared with you the concerns of a Deloitte partner who has a lot of issues with the processes around electing the firm’s leadership. As the partner explained it to us, “The elected individuals are the Chairman, the CEO, and a CEO ‘Alternate.’ The CEO ‘Alternate’ is there in the event that the CEO elect is also elected as the Global CEO (which will typically happen).”

Recently, we were able to confirm the candidates and thought we’d share them with all of you since some of you might not be aware of who they are:


• Punit Renjen, for Chairman of Deloitte LLP (Current CEO of Deloitte Consulting)

• Barry Salzberg, for CEO of Deloitte LLP (Current CEO of Deloitte LLP)

• Joe Echeverria, for CEO Alternate (Current Managing Partner of U.S. Operations)

What’s not immediately known is when Deloitte partners will be voting “Yes or No” on these candidates. One of our sources speculated that the vote could be as early this week.

In our previous post, we learned that the partners vote up or down on these candidates as a group as the partner in our last post explained “The partners get to vote ‘YES or NO’ on the ‘slate’ of candidates that is advanced.” Since we know a lot of you out there in Internetland are Deloitte employees but not partners, we thought we’d get your perspective on this slate of candidates and whether you would give them a “Yes” or “No.” And since the comments box allows for further explanation, feel free to elaborate on your vote. We know of one person who will be voting no.

A message left with Deloitte spokesperson Jonathan Gandal was not immediately returned.

Earlier:
Deloitte Partner Encourages Brethren to Take Back Their Firm

Compensation Watch ’10: Deloitte Wants to Keep Up with the Joneses

Or the Kylnvelds, Ernsts, Coopers (aka “c”). Take your pick.

From the mailbag:

All staff just received a voicemail from the firm stating that they will be performing a salary adjustment for all staff 2nd year through manager as they have realized the marketplace is providing different salaries than expected and would like to stay competitive. No word on amounts, one on one meetings with partners are occurring in the next week.


This little Friday Surprise was brought to you by Carlos Sabater (listen to the full message below) and the salary adjustment will be for audit professionals only. We’ll definitely be interested to hear what comes out of the meetings next week so keep us updated.

Reactions welcome.

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