This article reviews the basics of Chinese reverse takeover (RTO) companies, and of auditors’ responsibilities for the financial statements of foreign subsidiaries examined by other auditors. Some auditors may find themselves in jeopardy because of noncompliance with a seemingly innocuous, but critical, auditing standard under U.S. Generally Accepted Auditing Standards (GAAS) -- specifically AU sec. 543, Part of Audit Performed by Other Independent Auditors.
Attorneys with clients who are Chinese RTO issuers, or their auditors, might usefully review this standard to better understand its implications as it relates to the responsibilities of being a principal auditor. Read the full story.
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