PacificNet has revealed that the company had perhaps previously improperly accounted for option grants.
The company's prior independent public accounting firm, Clancy & Co. P.L.L.C, has withdrawn its audit reports for PacificNet's financial statements for the years ended December 31, 2004 and 2005. Clancy's decision to withdraw its reports after its resignation is the result of some uncertainties it now has as to whether option grants made by the PacificNet in 2004 and 2005 were properly accounted for.
On March 17 the audit committee of PacificNet engaged the company's newly appointed independent registered accounting firm, Kabani & Company, to commence an independent investigation into the past option grants. Once the investigation is concluded, Kabani is expected to present its findings in a written report to the Audit Committee for review. Pending the results of the investigation, a determination will be made as to whether a restatement of financial statements for the prior years will be required.
Clancy resigned as the company's auditor on January 19, 2007 without disagreement. On February 7, the Audit Committee of PacificNet appointed Kabani & Company as its new independent registered public accounting firm.
The withdrawal of audit reports by the accounting firm Clancy & Co. reportedly does not affect the current audit of fiscal year 2006 financial statements by its newly appointed accounting firm, Kabani & Company, it said in a statement.
