Due Diligence is required with increased fraud risk

in U.S. companies doing business or considering acquistions of companies in China.   Many companies are seeing China as a way to growth.   A recognition of the risks inherent when operation in a different culture including awareness of differences in the culture's norms and ways of doing business and even the way auditing is done is an important consideration when considering risks.

This article discusses the  example last month involving Caterpillar's purchase of a Mining Company and resultant disclosure of over a half billion dollars writeoff.   This article is interesting as it discusses the "red Ferrari" test.   Check it out....what doesa red Ferrari test refer to? http://uk.reuters.com/article/2013/02/10/business-us-usa-accounting-china-caterpi-idUKBRE91908Q20130210