Trees

Sino Forrest is a company that has millions of acres of trees on plantations in China. They have been accused of overstating their inventory, so to calm the waters they have hired Price Waterhouse Accounting to audit their books.
This is another one of those cases that I have referred to in the past where the accounting firm takes the word of the company to determine the value of the company. To review when AXA, a French Company wanted to get into the US life insurance market they offered to invest one billion dollars in Equitable Life of NY. Before doing that they spent 20 million appraising Equitable assets. Does anyone believe that Price Waterhouse is going to count the estimated billions of trees owned by Sino Forrest at a cost of millions or will they just go with the current inventory on the books?
If they just go with the current books then hiring this firm is just a PR stunt and in no way will determine if they are over counting inventory or not. It may calm the fears of ordinary investors but the pros know better. I bring this up to show why ordinary investors should stick to broad based mutual funds since ordinary people do not have the time to look into the accuracy of a company’s inventory data.