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Friday, September 18, 2015

PCAOB Auditors for HHSE

Good Morning HHSE Friends & Followers - HHSE was contacted last year by Terry L. Johnson, who indicated that he was performing and audit for Odyssey Pictures International (OPIX) and needed confirmation of some contractual ventures between HHSE and OPIX.  We confirmed the transactions, and asked if he (or his firm) was approved for Public Company audits as HHSE was ready to complete the documentation for a Form 10 registration.  Mr. Johnson acknowledged his credentials and registrations, and referred us to third party verifications.

HHSE proceeded to engage Johnson to perform the 2012 and 2013 audits and sent him three large file boxes of reports, back-up documentation and previously reviewed statements.  Over the course of the following five months, Johnson put Parkinson, Shefte and staff bookkeeper Daniel Ackerman through multiple Q&As, tasks and assignments.  HHSE had to provide additional contracts and supporting materials - such as the term payment agreements for SVOD licenses - and contact details for key customers requiring third party confirmations.  Parkinson noted that the level of supporting materials being required from Johnson exceeded any of the previous audits performed by KPMG when Parkinson was C.E.O. of Hemdale Communications, Inc. (NASDAQ).

Accordingly, HHSE was extremely surprised to discover from the S.E.C. in May of this year that Terry L. Johnson had lost his PCAOB certification, and was the subject of an investigation into other clients (but specifically NOT Hannover House). We relayed to the S.E.C. that from our perspective - based on emails, calls, time invested and back-up documents required over a five-month period - it appeared that Terry L. Johnson was very thorough with the HHSE audit project.  We were told by Andrew Mew of the S.E.C., that although nothing appeared amiss with the HHSE audits, the loss of PCAOB certification for the auditor (due to his other activities), meant that our filing was technically "deficient" and should be withdrawn.

The new auditing firm for HHSE is also PCAOB Certified and registered.

In selecting an auditor / auditing firm, HHSE must rely upon the credibility and accountability of these professional organizations to maintain proper membership. HHSE will reserve its rights and remedies with respect to actions it may take against Mr. Johnson to recover fees or damages.  If it is discovered that Mr. Johnson was aware of an investigation and the possible loss of his PCAOB certification status prior to the filing of the HHSE Form 10, this could open up HHSE to a claim.

As stated previously, HHSE is not required to disclose the new auditing firm until we re-file the Form 10, which includes Y/E 12-31-2014.