TORONTO, Dec. 3, 2012 /CNW/ - Staff of the Ontario Securities Commission
(OSC) today issued allegations against Ernst & Young LLP, former
auditors of Sino-Forest Corporation (Sino-Forest).
OSC Staff allege that Ernst & Young breached the Ontario Securities Act
by failing to conduct their audits in accordance with relevant industry
standards. The audits related to the 2007, 2008, 2009 and 2010
consolidated financial statements of Sino-Forest.
"Our investigation into Sino-Forest is a complex international
investigation, and a major focus has been on whether gatekeepers such
as auditors and other corporate advisors properly performed their role
in protecting investors," said Tom Atkinson, Director of Enforcement.
"Investors rely on auditors to conduct their audits in accordance with
professional standards, particularly when foreign companies are listing
on Canadian exchanges. If auditors fail to abide by Canadian auditing
standards and securities laws, we will hold them accountable."
In the Statement of Allegations, OSC Staff allege that Ernst & Young
failed to perform sufficient audit work to verify the ownership and
existence of Sino-Forest's most significant assets. OSC Staff also
allege that Ernst & Young failed to undertake their audit work on
Sino-Forest with a sufficient level of professional skepticism.
On May 22, 2012, the OSC issued allegations of fraud against Sino-Forest
and former senior executives. Those proceedings are ongoing.
The mandate of the OSC is to provide protection to investors from
unfair, improper or fraudulent practices and to foster fair and
efficient capital markets and confidence in capital markets. As part of
its review of emerging market issuers, the OSC recently issued an Issuer Guide for Companies Operating in Emerging Markets that summarizes its expectations for reporting issuers listed on
Canadian exchanges with significant business operations in emerging
SOURCE: Ontario Securities Commission
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