PetroAsian headed for showdown with auditor over bid to sack it

PetroAsian Energy Holdings is likely to have a showdown with its auditor, Baker Tilly Hong Kong, on Monday.

In a rare move, the company's directors are trying to sack the auditor. They are holding an extraordinary general meeting on Monday to seek shareholder approval to remove Baker Tilly - which has served as the company's lead joint auditor for four years - and replace it with Deloitte Touche Tohmatsu.

But Baker Tilly is fighting back. The firm sent two letters to the board, noting shareholders approved its appointment at the last annual general shareholder meeting and that 'there is no reason for us to resign'.

In letters posted on the Hong Kong stock exchange website, Baker Tilly Hong Kong director Paul Phenix said it would not be in the best interest of shareholders to change auditors at such a late stage in the financial reporting period because it was likely to lead the company to miss the reporting deadline of July 31.

PetroAsian, initially a paint producer in southern China, has expanded into oil exploration in recent years. Anson Poon, the firm's executive director and financial controller, said Baker Tilly had been its auditor for four years and there had been no problem with its service.

But he said PetroAsian wanted to changed auditors because Deloitte had been involved in due diligence on an oil project in Mongolia that the company had acquired.

'Since our company has expanded to the oil exploration businesses we considered we would like to have an accounting firm which has more specialists in that area,' Poon said.