Petrochemical Company Releases Independent Report by Auditors

Michelle Remo, “Big 4″ observer
July 12, 2011 /

A Chinese petrochemical company has made no inappropriate accounting of its customer transactions nor has it intended to misstate revenues, according to the report by independent auditors.

Keyuan Petrochemicals, Inc. announced that its audit committee has received initial findings of its independent investigation of the Company’s 2010 sales and revenue from Deloitte Financial Advisory Services, King & Wood, Pillsbury Winthrop Shaw Pittman LLP and a petrochemicals industry expert.

The auditors separately checked the accuracy of information about the Company’s 2010 sales.

Among others, the report showed that there was nothing to indicate that the petrochemical company “has inappropriately accounted for the specific customer transactions” that the auditors were able to test.

“The company-arranged interviews with selected customers supported that the customers transacted business with the Company in 2010,” the findings stated.

The auditors added that they have found no document that reflected “any intent by the company to misstate revenues.”

The audit committee of the petrochemical company has hired on March 31 this year Pillsbury, Deloitte, and King and Wood to conduct the independent inquiry. Several issues were raised during the stint of KPMG as auditors of the petrochemical company.

“Plant visit and document review by an expert in the petrochemical industry supports the finding that the plant is operating and producing petrochemicals at a quantity consistent with the revenues stated by the Company. Interviews with management and selected Company personnel were consistent with the above findings,” Keyuan Petrochemicals maintained.

“We are pleased with the results of the independent investigation,” said Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals.

“The findings support our assertion throughout this process that we are an excellent company on solid financial footing with a clear and focused growth strategy. Having cooperated fully with examiners and regulators during this extensive review process, we will continue to focus on completing our 2010 and 1H 2011 audits.”

A group of lawyers and forensic accountants reviewed a number of documents at Keyuan’s offices, visited select customer locations throughout China, and interviewed representatives of the customers, and senior officers and personnel of the petrochemical company.

An industry expert with years of experience in the petrochemicals industry was also consulted to look into Keyuan’s production plants and operations.

Keyuan Petrochemicals established in 2007 and operating through its wholly-owned subsidiary, Keyuan Plastics Co., Ltd., is located in Ningbo, China and is a leading independent manufacturer and supplier of various petrochemical products.

 

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