RE: RE: RE: RE: RE: RE: RE: RE: E&Y Settlement = B Without predjudice
Here is the way I see it.
E&Y had nothing whatsoever to do with Sino's problems. They had no role in the downfall of Sino. They deserve no blame for the fact that Sino is no longer in operation.
HOWEVER
E&Y were supposed to be working for anyone who invested money with or lent money to Sino Forest. That means us - you and me.
E&Y's position as auditors of Sino was to ensure that the company books were accurate and that the company's accounting practices conformed to North American GAAP accounting standards. In other words they are there to protect the shareholders - you and I - by ensuring that the company books are true and accurate and not falsified to fraudentuly extract shareholders money..
You can say what you like about the Chineese Government, but this was a Canadian Company, audited by a Canadian accounting firm who's duty it was to ensure that Sino's books were accurate and conformed with Canadian accounting standards. Because of this, many Canadians invested in this company on the assumption that the company books were correct and had been audited and by E&Y.
For instance the company for which I work is audited on a yearly basis by an accounting firm like E&Y. During that audit, our inventory is physically checked to ensure we have what we say we do and our accounts receivable are also checked to ensure that they are also correct and legitimate. This is just normal business practice and part of a yearly audit done on most companies. Then our bank and other creditors rely on that audit and takes this information as truthfull and uses that to decide how much money to lend us.
You and I were like Sino's bankers. We relied on E&Y's reports as a stamp of approval that Sino a) had the trees they say they had, b) that those trees were worth the amount that Sino said they were, and c) that the accounts receivable were accurate and legitimate.
Now I haven't followed this situation as closely as many here, but it appears that trees were not where they should have been, that they weren't worth what Sino said they were, the accounts receivable were innaccurate and other dealings were not at arm's length. If that were true, E&Y should have have exposed this.
But based on E&Y's approval of Sino's books, investors invested in the company assuming that E&Y had done their job. But did E&Y check the value of Sino's tree inventory? Were the trees there? Were the trees worth what Sino said they were worth? Were Sino's accounts receivable legitimate? In other words, was Sino worth what Sino said it was worth?
This is pretty basic stuff. If the company was worth the billions that they stated they were worth they would still be a viable enterprise.
So I don't blame E&Y for Sino's downfall. in fact if anything, the opposite appears to be true. If Sino was a fraud or even partially fraudulant, than E&Y should have exposed that and brought the company down at the first sign of irregularities. If E&Y is to be blamed for anything it is allowing Sino to continue in operation.