An independent financial statement audit done by external auditors is the most extensive attest service provided by auditors, and it is still limited. A review of financial statements by an independent auditor is even more limited in scope.
Reviews amount to auditors looking at account balances and determining whether or not the balances look reasonable. They will perform some analytical procedures on the financial statements to further analyze the numbers. On occasion, they may ask to see some details about accounts and their balances, but this happens on a very limited basis. Continue reading
UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.
Last week, Medifast Inc. (NYSE:MED) announced that it changed auditing firms. The company previously used Bagell, Josephs, Levine and Company, and they were criticized for the choice of auditors by Fraud Discovery Institute and Sam Antar. FDI’s criticism was summed up in a press release:
Expert’s letter sites possible stock-touting of Medifast (NYSE:MED) stock by company’s single-officed, New Jersey based, outside auditors through their alleged independent investment entity. Expert also notes that PCAOB cited Medifast auditors for significant deficiencies in three of six audit engagements reviewed by them, or 50% of audits in their sample.
Antar simply said that if Medifast was serious about the quality of its auditors, then it would find new ones. Continue reading
Today (bold added by me):
USNAannounced Wednesday that PricewaterhouseCoopers has been hired as the company’s new independent auditor. We are encouraged by this news as we view PwC’s new role as a sign of Usana’s financial legitimacy; however, we are still wary of Usana’s management team. PwC will immediately begin reviewing Usana’s second-quarter results, which were filed but never reviewed by an independent auditor, thereby making the company delinquent in its regulatory filings. Usana did not disclose the fees it will pay PwC but will provide further details in an 8-K, which management expects to file soon. While we don’t anticipate any major changes to our fair value estimate from either the 8-K or amended 10-Q, we will review both filings carefully and adjust our projections accordingly. Continue reading