This is why the FAB auditor could sign off on a 10-K while the NQ auditor cannot. FAB is a "Smaller Reporting Company" as the exact designation while NQ is an "Accelerated Filer". Possibly a "Large Accelerated Filer", but definitely not a smaller reporting company.
This means that the FAB auditor did not have to sign off on corporate control issues as is stated in their 10-K:
"This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that exempts from this requirement issuers that are neither accelerated filers nor large accelerated filers."
That is on page 76 of their 10-K if you want to verify it. NQ is an accelerated filer so they need the attestation report from their auditor. That is what is holding up their report. Here is what FAB said about their controls:
Here is the FAB disclosure from page 77 of their 10-K:
"Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Our internal control over financial reporting is designed to provide reasonable assurance to management and the Board of Directors regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on our assessment, management believes that we did not maintain effective internal control over financial reporting as of December 31, 2013."
So there is your difference between FAB an NQ. FAB can get away without an auditor opinion attesting to their internal controls while NQ needs one and it appears their auditor will not give them an unqualified opinion. This is where Joe is deceiving you when he talks about an "unqualified opinion". FAB did not get an unqualified opinion from their auditor. They did not get an opinion attestation since none was required. It might seem subtle, but is a big difference. Spencer and Busshaus both signed the 10-K, but I repeat... look at what was removed from previous reports. Instead of successfully refuting any of the allegations, they merely removed all language referencing them from the 10-K. That is the ethical standards you are dealing with here.
"So there is your difference between FAB an NQ. FAB can get away without an auditor opinion attesting to their internal controls while NQ needs one and it appears their auditor will not give them an unqualified opinion. "
It is 20-F not 10-K for NQ. Also you are speculating regarding NQ you have no idea what is going on.
Thanks lbcb for pointing out difference between Smaller Reporting Company and accelarated filers.
If 10K does not contain references to information which is controversial, can that be used as a beating stick by NYSE listing requirements committee on July 16 to argue for delisting FAB ? Or will any corrective action being pursued by FAB be sufficient enough for NYSE to let that issue be addressed ?
I am trying to highlight which aspects would be argued in favor of delisting by NYSE vs which aspects will be argues by FAB in its favor to rescind delisting and resume trading.