Question

Can you get answers to the case questions of Case 8.1 Longtop Financial Technologies Limited?

Answer 1

2Running Head: Longtop Financial Technologies Limited Case 8.1The Longtop Financial Technologies Limited was founded in 1996 by Jia XiaoGong and Weizhou Lian in Beijing China the company is in the information technologyindustry. They quickly became the number one provider in information technology inChina’s banking industry with 3 out of 4 biggest banks in the country. In October 2007the company went public in the New York Stock Exchange and it doubled in price in itsfirst day of trading. Now Longtop would be regulated by Securities and ExchangeCommission and would need to follow reporting guidelines under generally acceptedaccounting principles.In 2011, pre-audit a US investigating firm said that the 400million dollars in cash, which equaled to 60 percent of the company assets doesn’t exist.The auditor D & T Shanghai responded to the allegation by extending their audit and inorder to reconfirm the balance with the bank. They learned from the bank that they didn’thave the cash stated in their financial statements and that there was long-term debt notreflected on the company books. Therefore, on May 22, 2011 the auditor wrote a formalresignation letter. They identify three main reasons for resignation as (1) falsifyingfinancial record with relation to cash; (2) management interfering during the auditprocess; (3) the improper detention of our audit files. By the end of the year the SECbanned the Longtop securities from the US stock exchange. Following these issue theSEC required that D& T Shanghai turn over there auditor's work papers for their ongoing