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Ebix Inc. Message Board

  • maverick_f18 maverick_f18 Jun 22, 2013 12:16 AM Flag


    Only a complete idiot would get an audit on every single subsidiary company it owns. It isn't needed so a company would just be throwing money away. Does GE have an audit done on the thousand various subsidiaries they own throughout the world? Of course not. Because they aren't a bunch of morons.

    EBIX has the holding company audited every quarter and on an annual basis just like every other public company. And of course those audits pick up the subsidiaries. It is not like the auditors just say oh let's not worry about Singapore or India. They are looked at. The consolidating statements, which tie it all together, are looked at.

    Only a moron would make the claim that a lack of an audit for some subsidiary is something to be concerned about. Only a fool would audit every single subsidiary owned.

    Sentiment: Strong Buy

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    • Just to give you an opinion from someone that works in accounting for an international company (I am over our latin American entities) are right that the holding company is audited and that there can be some subs that aren't material. However, I think the issue is there isn't really a reason that the company shouldn't have the group opinion and the statutory opinion done in the same time frame. That is pretty common...the way we do it and other companies I audited (I worked at Deloitte for a few years) was that the group opinion would coincide with the statutory opinion.

      So it is normal that a local office in the other country does the audit for both I think this gets to the level of the audit firm (are they big enough to really properly do an international company audit, etc) and what exactly they are relying on to get comfort on the foreign subs...

      Also, it is a concern if they aren't filing statutory audits as a lot of countries require that. There can be significant penalties and risk to the business. As well, where the accounting rules are at least basically the same from a financial accounting standpoint, I don't see a reason they shouldn't be complete as they must have the same information that the group auditor is signing off on...

    • Obviously you are not an accountant. I am not either, but know a little about what a financial statement means. The consolidated balance sheets, cash flow statements, and income statements are the audited financial statements, and are quite accurate when the audit is by a legitimate CPA firm. The schedules for the subs that add up to the consolidated numbers are technically not considered audited information, but the consolidated numbers will be wrong (due to simple math) if the consolidating numbers have any errors, so as a practical matter, all subsidiaries are part of the audit process.

      I believe the likelihood is that the company has, at worst been somewhat aggressive in the booking of revenues in low tax subs. If some of these revenues have to move to higher tax (US) subs, there will be taxes and fines due. It will be a onetime hit of however much. It could result in needing to float a note, or it could involve a small secondary offering in the worst case. It would not mean that the Company is crashing and burning.

      Sentiment: Buy

      • 1 Reply to valubyer
      • "...all subsidiaries are part of the audit process." That is basically what I said.

        "I believe the likelihood is that the company has, at worst been somewhat aggressive in the booking of revenues in low tax subs" And why is that? Just a hunch? Hunches aren't good enough. And Goldman spent millions of dollars looking into all this and were comfortable with it. The company will likely get those acct firms to issue an opinion on it all soon.

        Sentiment: Strong Buy

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