NOTE: While I am on vacation, I invited some guest posts from popular bloggers. Following is our second guest post from Francine McKenna, managing editor of Re:The Auditors. She is also a popular speaker, and will be on a panel at the New York County Lawyer's Association on Sept. 15. Her guest blog post follows.
There’s been quite a bit of press about American Apparel’s financial troubles. It’s now three weeks since the company announced that its auditor, Deloitte, had resigned. (See also the company's Form 8-K and the auditor's response.) Shares plunged almost 25% on that news.
It’s not often that we see the details behind a high profile auditor resignation. It’s even more unusual to see that auditor resignation investigated by the U.S. Attorney's Office. Further, if a company goes bankrupt, we may learn more about how the auditor relationship deteriorated via a bankruptcy examiner’s report.
New Century Financial Corp. creditors have asked a federal judge for permission to investigate KPMG LLP's relationship with the bankrupt subprime mortgage lender…New Century's official committee of unsecured creditors said it wants to obtain documents from KPMG, and question current and former officers concerning its accounting, auditing and other services for New Century. KPMG resigned as auditor on April 27, 25 days after New Century filed for Chapter 11 bankruptcy protection from creditors.
Part of the problem with American Apparel may be its thirty-one year old CFO Adrian Kowalewski. It’s beyond my ken how a listed, public company with a history of accounting issues can get away with naming an investment banker with no CPA or even a hint of hands-on accounting experience to CFO. Read more here.