1) ABOUT AUDITOR KABANI FRESHLY RATIFIED THIS WEEK..
The Public Accounting Oversight Board finds numerous deficiencies when it inspected NTWK's Auditor Kabani and Company
PCAOB Release No. 104-2010-116 Inspection of Kabani & Company Inc. July 29, 2010.
Those deficiencies were (I am quoting just a few)–
(1) the Firm's failure, in two audits, to identify, or to address appropriately, departures from GAAP that related to potentially material misstatements in the audited financial statements concerning the reporting of minority interest;
(2) the Firm's failure to identify, or to address appropriately, a departure from GAAP that related to potentially material misstatements in the audited financial
statements concerning the reporting of a disposal group held for sale and discontinued operations;
(3) the failure, in two audits, to perform sufficient procedures to test revenue;
(4) the failure to evaluate the functional currency of a consolidated subsidiary;
(5) the failure to perform adequate procedures related to the valuation of acquired patents; and of Omitted Procedures After the Report Date, and AU 561, Subsequent Discovery of
Facts Existing at the Date of the Auditor's Report (both included among the PCAOB's interim auditing standards, pursuant to PCAOB Rule 3200T). Failure to comply with
these PCAOB standards could be a basis for Board disciplinary sanctions.
(6) the failure to perform sufficient procedures to test whether advance payments represented probable future economic benefits.
9/ In some cases, an inspection team's observation that a firm failed to perform a procedure may be based on the absence of documentation and the absence of persuasive other evidence
For purposes of the inspection, an observation that the Firm did not perform a procedure, obtain evidence, or reach an appropriate conclusion may be based on the absence of
such documentation and the absence of persuasive other evidence.
2) POOR INTERNAL CONTROL:
And we all know about NTWK's assessment that their accounting procedures and personnel and inadequate and should not be relied upon, right??:
HIRED A CFO ACCUSED OF SECURITIES VIOLATIONS:
But they've tried to fix that problem by hiring a US-based CFO who settled out of court for $5 million for securities violations executed at another public company where he had a similar role: