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FYI: Those Jones, Moore & Associates Audit Opinions Aren’t Worth Much

Posted on by Caleb Newquist

There probably aren't too many of them floating around out there, but if you happen to see one, see if you can get a second opinion:

The SEC alleges that James Michael Murray raised more than $4.5 million from investors in his various funds including Market Neutral Trading LLC (MNT), a purported hedge fund that claimed to invest primarily in domestic equities. Murray provided MNT investors with a report purportedly prepared by independent auditor Jones, Moore & Associates (JMA). However, JMA is not a legitimate accounting firm but rather a shell company that Murray secretly created and controlled.  

[via SEC]

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Auditor Resignation Du Jour: Deloitte Didn’t Appreciate Their Audit Files Being Held Hostage

And yes the perpetrator, Longtop Financial Technologies, is a Chinese company.

As we mentioned, Deloitte had some decent reasons for kicking LFT to curb, among them:

(1) the recently identified falsity of the Company’s financial records in relation to cash at bank and loan balances (and possibly in sales revenue); (2) the deliberate interference by certain members of Longtop management in DTT’s audit process; and (3) the unlawful detention of DTT’s audit files. DTT further stated that DTT was no longer able to rely on management’s representations in relation to prior period financial reports, that continued reliance should no longer be placed on DTT’s audit reports on the previous financial statements, and DTT declined to be associated with any of the Company’s financial communications in 2010 and 2011.

And because it seems to be the standard narrative in stories such as these, Longtop’s CFO has resigned and “The Audit Committee has also initiated a search for a new auditor.” Although were not sure if there’s a firm out there that will pick up a client who has engaged in hostage taking.

[via Longtop Financial Technologies]