Bohemia, N.Y. (PRWEB) February 08, 2013
On February 8, Jim Diapoules, partner of Diapoules and Feinstein CPAs P.C., reacts to an article published by U.S. News, which details China’s fraudulent accounting problems.
According to the U.S. News article, nine Chinese companies are under investigation for fraud by the Security and Exchange Commission. The S.E.C required these companies to turn over audit documents, but the Chinese government has prohibited these companies from complying. According to the article, China said that handing over these documents would internationally reveal “state secrets.” China banned its local Big Four affiliates from handing over any documents to the S.E.C., reports U.S. News.
The article suggests the secrets could include scandals involving the biggest firms in China with close ties to the Communist Party. These scandals most likely involve embezzlement, bribery and criminal fraud, reports the article. The article suggests that the Communist Party’s leaders have made a significant amount of money off of these fraudulent deals.
No matter what the investigation finds, the article states that the U.S. must take control over the situation. The article pointed out three ways for the U.S. to obtain the status quo. First off, the U.S. needs to stop big Chinese corporations from listing on exchanges through “offshore shell companies,” the article said. Then the U.S. needs to raise auditing standards of American companies in China. Finally, the U.S. must quickly remove unyielding Chinese firms that will not abide by the new accounting and auditing standards.
“We firmly believe confidence in a company’s financial reports can only be achieved by the transparency of their accounting books and records. If and when a company refuses to a request for information that will justify their financial reports then authorities have every reason to delist them from a regulated exchange and prohibit them from soliciting capital in the United States. If a government blocks an auditing firm from releasing requested information the US public will not have any assurance regarding the veracity of a foreign company’s financial statements. The SEC or other regulatory agency should step in to limit Americans’ability to invest in those companies which undoubtedly limit the ability of these companies to raise capital,” said Marvin Feinstein, partner at the Suffolk CPA firm Diapoules & Feinstein.
Diapoules and Feinstein CPAs P.C. have been providing accounting, auditing and tax services to Greater New York City area since 1989. D&F provides our clients with great personal attention and years of professional experience in order to see them succeed and help them to feel confident.