Because of this important agreement today btw the US and China:
U.S.-China audit agreement ‘a major catalyst,' expert explains
U.S.-China audit agreement ‘a major catalyst,' expert explains
China stocks next week skyrocketing
- Thread starter earth_imperator
- Start date
Does audit improve the performance of a company? Nope. It's just a fact checking. The audit issue is the key whether Chinese stocks shall remain in the US exchange. The Chinese companies stock price will ultimately depend on its performance. Of late, Chinese companies are facing many challenges. Another key factor is related to technology transfer which western countries are imposing restriction.
I agree. All will depend on how the agreement is going to be executed and how the audit is going to be carried out. I mean many of the problems are actually very obvious and don't really require any extensive audit. All you need to do is just be allowed to observe the company and you will find out if its reported revenues/profit is legit or not. The majority of these audit requirement is really basic. I can't believe when it comes to China, you actually need an agreement to carry out basic audits. LOL
China stocks next week NO skyrocketing
big, strong, audited firms can collapse.
Barrings Bank - Nick lesson unlimited futures trading
Enron - top level concealed huge losses
Bear steams - subprime mortgage crisis
Lehman Brothers - mortgage debt crisis
Madoff Investment securities - the Ponzi King
Wirecard - $$$ disappeared
Just focus on trading and not auditing and not investing.
big, strong, audited firms can collapse.
Barrings Bank - Nick lesson unlimited futures trading
Enron - top level concealed huge losses
Bear steams - subprime mortgage crisis
Lehman Brothers - mortgage debt crisis
Madoff Investment securities - the Ponzi King
Wirecard - $$$ disappeared
Just focus on trading and not auditing and not investing.
Auditing is not foolproof and infallible. Auditors are not the police or some super detectives who can detect every single fraud that exists in the books. It's not like just because the company was audited that it is automatically honest. Auditing is just a process and a mechanism to confirm what the company states on the financial statements is really reflected in actual existence, for example, if the company states it has $1 billion in cash, the audit process will go into all of the bank accounts of the company and confirm that there is indeed $1 billion there but if the company provides bogus bank accounts or provide fraudulent bank statements, the auditors are not going to catch that. And this is what happened with Enron and Madoff Investment. So with or without auditing, the companies are still expected to do their due diligence to make every effort to be honest about what they put on their financial statements.
And out of these listed firms above, only three firms, Barrings Bank, Bear & Stearns (not Steams) and Lehman Brothers were audited and still failed due to risk mismanagement in their trading endeavours. The rest of the firms failed because they were all frauds, either deliberately misleading auditors or committing fraud outright so auditing still helps to ensure investor confidence and integrity of the financial investing process. If there are still frauds existing with the reporting and auditing requirement for public companies, imagine if there is no reporting and/or auditing requirement for publicly listed companies.