Much reliance seems to be placed on BDO as the auditor and the certification they have placed on ONP's financials. As a starting point you might be interested in a report done by COSO evaluating financial frauds in US companies over the last 10 years. ~350 total frauds with 51 that identified the auditor.
an excerpt... "Out of these 51 cases, 22 involved a national audit firm, while 29 involved a non-national audit firm."
The 60 page report on fraud is not meant as an indictment of any audit firms. The raw numbers suggest that major auditors are as likely as smaller firms to be representing fraudulent companies.
In the largest sense you should take note of the fact that COSO identified nearly 3 instances of fraud every month over the prervious ten years and every one of thos 350 companies had auditors. BDO is not a guarantee of anything.
A simple review of ONP's SEC filings will show that the auditor is not BDO Seidmann. If you want the link, I will provide it. Check with BDO Seidmann on how much it would cost to do the audit? its not going to be the $50,000 that ONP paid.
I was waiting for a shorting basher to come up with this. Thanks for proving me right.
So you're saying that because BDO is a non-national it is highly likely to be involved in an accounting scam in cahoots with ONP????
BDO makes $4 Billion a year yet they need to risk their 30-year old business over a company that makes about $100MM a year?
All you did in your post was ATTEMPT to instill doubt because BDO is an international company and use inductive reasoning to make people believe that it is highly likely that BPO is a fraud as well. Won't work, shorty.
Show us the links and PROOF that BDO has been involved in a major scam involving 100's or even 10's of millions of dollars. I'll be waiting for your link proving that BDO is a fraud. Thanks.
The link was to exhibit that financial fraud occurs with Big 4 firms at the wheel as well as small firms and in a fairly close ratio.
I entirely agree with your supposition that BDO is not involved with a fraud. What I disagree with is your understanding of what BDO is auditing and what the certification means.
As a starting point you need to remember that ONP has absolutely no direct ownership of anything. ONP books results from the VIE that they control. In designing an audit for an entity that owns nothing other than proxies and options on the China operations I am not sure what would meet GAAS. Are you?
You also will note that BDO specifies that the financial statements are the responsibility of management. That is basically telling you that they have management representations on which they place "reasonable reliance". If BDO received an audited financial from the Chinese CPA who prepared the SAICs they are also expected to defer to the reputable work of others.
The issue you raise is not the black or white choice you limit it to. Poorly understanding what auditors are expected to do limits the nuance you can appreciate. BDO is very unlikely to be auditing HBOP directly or the Bermuda intermediary.
This is not an unfamiliar subject to me and you can be certain that I know far more about auditing practices and Chinese entities then you will ever care to know.
In the end, because of the structure, BDO may only look at the numbers submitted from HBOP once filtered through the Bermuda shell.