EXPLANATORY NOTE
GC China Turbine Corp. (the “Company”) is filing this Amendment No. 2 to its Current Report on Form 8-K which was originally filed with the Securities and Exchange Commission (“SEC”) on September 27, 2011, as amended on October 6, 2011, to incorporate the Company’s revisions and responses to a comment letter from the staff of the SEC dated October 12, 2011.
Item 4.01. Changes in Registrant’s Certifying Accountant.
(a) Dismissal of Previous Principal Independent Registered Public Accounting Firm.
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i.
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Effective September 21, 2011, the Board of Directors of the Company approved the dismissal of Deloitte Touche Tohmatsu CPA Ltd. (“DTTC”) as the Company’s principal independent registered public accounting firm because of high review and audit costs.
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ii.
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DTTC’s reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2009 and 2010 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
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iii.
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During the Company’s two most recent fiscal years (ended December 31, 2009 and 2010) and during the subsequent interim period through September 21, 2011, there were (1) no disagreements with DTTC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of DTTC, would have caused DTTC to make reference to the subject matter of the disagreements in connection with its reports, and (2) except as noted below, no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.
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(A) On September 16, 2011, DTTC received an anonymous email alleging certain prior-year financial matters which, if true, may have a material impact on the Company’s consolidated financial statements. On September 22, 2011, DTTC communicated to the Company’s Board of Directors and management the contents of this email and DTTC requested that the Company investigate the allegations made therein, but DTTC has expressed no view as to whether or not such allegations have merit.
(B) The nature of the financial matters referenced in the email concern the validity of certain transactions and account balances. Specifically, the anonymous email alleges (x) fraudulent fund transfers resulting in incorrect accounts payable balances, (y) a fabricated contract for the purposes of transferring funds outside the Company, and (z) a fake payment entry from a customer. If some or all of the foregoing financial matters prove true, they may impact certain balance sheet accounts of the Company including but not necessarily limited to accounts payable, cash, accounts receivable and inventory and may also impact certain income statement accounts including sales and cost of goods sold. However, at this time, no determination has been made as to the existence, materiality or material impact of any of such financial matters and based on the nature of the communication, it is unclear as to which periods the allegations would impact if proven true.
(C) Upon the Company’s receipt of such correspondence from DTTC, management immediately established a special team to investigate the contents of the anonymous email. At this stage, based on management’s investigation results, management believes there is no evidence to indicate that the claims have merit. Due to the short time under which management has had to conduct a preliminary investigation, it is the intent of the Board to continue and complete the investigation, including having such investigation led by its independent Board members.
(D) The Company has authorized DTTC to respond fully to inquiries of the successor accountant, Schwartz Levitsky Feldman LLP, whose engagement is noted in Item 4.01(b) below, concerning the foregoing reportable events.
(E) The cessation of the Company’s relationship with DTTC is completely unrelated to this anonymous email and the allegations therein.
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iv.
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The Company provided DTTC with a copy of this disclosure on October 19, 2011, providing DTTC with the opportunity to furnish the Company with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the statements made by the Company in respect of Item 304 and if not, stating the respects in which it does not agree. A letter from DTTC dated October 19, 2011 is attached as Exhibit 16.1 to this current report.
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(b) Engagement of New Principal Independent Registered Public Accounting Firm.
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i.
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Concurrent with the decision to dismiss DTTC as the Company’s principal independent registered public accounting firm, effective September 21, 2011, the Board approved the engagement of Schwartz Levitsky Feldman LLP (“SLF”) as the Company’s new principal independent registered public accounting firm.
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ii.
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During the Company’s most recent fiscal years (ended December 31, 2009 and 2010) and through the subsequent interim period to September 21, 2011, the Company did not consult SLF with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report was provided to the Company or oral advice was provided that SLF concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (b) any matter that was the subject of either a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
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Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
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Number
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Description
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16.1
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Letter from Deloitte Touche Tohmatsu CPA Ltd. to the U.S. Securities and Exchange Commission dated October 19, 2011.
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