KPMG withdraws its report on CannTrust's financial statements
The report that auditor KPMG was withdrawing its report on CannTrust’s financial statements for 2018 and the March 2019 quarter was potentially very important.
The auditor said, “KPMG was not aware of the information recently shared by the Company when it issued the KPMG Reports and had relied upon representations made by individuals who are no longer at the Company.” In other words, KPMG was not informed that TRST was growing illegally and that certain assets and certain revenues might have been based on illegal activities which might now mean they are not assets and revenues.
If we think back to the case of Ascent Industries (CSE: ASNT), failure to file required financial statements was the reason their stock was halted many months ago and the reason the shares have not been traded on the exchange ever since.
In addition, the audited financial statements are a primary tool used by financial analysts and others in estimating the value of a company that probably forms the basis for any takeover offer or asset purchase. Even if KPMG stays on as auditor and issues a qualified opinion – notes to the financial statements that basically say these reports cannot be counted on because…. – it may not satisfy the exchange requirements.
If there is a Canadian auditor who can explain how TRST can extricate itself from this pickle, please let me know by sending an email to firstname.lastname@example.org I would be pleased to share your knowledge with our readers.