Fifty-two-yearold Bottini drew a $50,000 civil money penalty and was censured for his role in the audits of the financial statements of UTG. Barred from affiliating with a PCAOB registered firm, Bottini can apply for reinstatement after two years.
Despite the warnings, the PCAOB said Bottini never communicated with the prior auditor or request UTG permission to review the predecessor's workpaper after his firm accepted the engagement. That occurred on April 21, 2011 subject to Rotenberg's stipulation that UTG clear its client acceptance procedures. UTG declared that accomplished on April 29 and the accounting firm soon issued an unqualified opinion for UTG's financial statements for the year ended Dec. 31, 2010.
UTG, which claims to sell airline tickets, hotel rooms, and packaged tours by telephone, in person, and over the Internet, conducts all operations in the People's Republic of China. On Sept. 15, 2010, five days after UTG changed auditors Australian advisory firm described UTG's English language booking systems as dysfunctional, said web traffic was very low compared to competitors and that certain financial statement balances were suspicious. In March 2011, a U.S. research firm accused UTG of "lying about the amount of cash on its balance sheet." That firm also said it examined financial results for some UTG subsidiaries that were reported to Chinese authorities and found them far worse than those filed with the SEC. Despite these warnings
When the predecessor auditing firm sampled customers and deposit holders via telephone, it found many customers reported not received any confirmations or had not confirmed any balance due. Tests of the company's substantial cash tour revenues found UTG couldn't provide documents such as invoices and receipts and some documents appeared to be newly created.
The PCAOB report also noted that the auditors were unable to confirm one third of a reported cash deposits of $59.3 million in a Chinese bank. It also found that Rottini's firm sought confirmation of accounts that comprised only 20 percent of year-end accounts receivables balances and allowed for UTG to arrange for pickup and delivery of confirmation.Last modified on Monday, 14 July 2014