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July 21, 2011

Lawsuit against BDO and PKF gets go ahead

The stakeholders of US listed Chinese firm China Expert Technology were given the go ahead to proceed with a suit against its auditors PKF Hong Kong, PKF New York and BDO McCabe Lo, according to Reuters.

China Expert Technology shareholders have accused the auditors of failing to detect an alleged $132m in fraud carried out by the company.

After three years of unsuccessful litigation and three dismissals due to inadequate claims US District Judge Alvin Hellerstein in New York has now allowed the suit to proceed.

This case is one of many involving Chinese companies listed in the US that have been involved in financial irregularities.

Earlier this year Deloitte quit as the auditor of Longtop Financial Technologies after discovering falsified financial records, including sales revenue and cash at bank and loan balances. 

In order for the shareholders of China Expert Technology to be successful in this suit they still have to prove the auditors knew of the alleged fraud.

BDO International refused to comment on the latest developments due to ongoing legal proceedings and PKF Hong Kong and New York did not respond to our calls.

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