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10 Jun 2011
REVERSE MERGERS could result in or conceal accounting irregularities, according to the US Securities and Exchange Commission.
A slew of fraud and scandals have dogged Chinese reverse mergers – where a smaller company buys out a larger peer – and mergers with US shell companies, Reuters reports.
Further reading
The tactic allows companies to trade on US stock markets despite being based abroad; the listing process is faster than a traditional initial public offering and involves less rigorous scrutiny, potentially allowing for sub-standard accounting.
Some reverse mergers are audited by small US firms, which may not have the resources to fully investigate an overseas company.
More than two dozen China-based companies have suffered auditor resignations or accounting problems since March and the SEC has launched a broad investigation. In a recent bulletin it warned investors: "Many companies either fail or struggle to remain viable following a reverse merger."
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Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
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