Big Four auditor Deloitte has resigned from Xiamen software manufacturer Longtop Financial Technologies, saying it discovered 'falsity' in the company's financial records. New York-listed Longtop, which was advised on its 2007 initial public offering (IPO) by Goldman Sachs and Deutsche Bank, is the latest in a string of mainland companies listed in Hong Kong or New York, with eminent advisers, to become embroiled in accounting scandals. Longtop also admitted, late on Monday, that it was under investigation by America's Securities and Exchange Commission (SEC) and that chief financial officer Derek Palaschuk had resigned. Longtop told the New York Stock Exchange that Deloitte had quit because of 'recently identified falsity' in its financial records and 'deliberate interference' by Longtop management in the audit process. Deloitte declined to comment, but the Longtop statement said the accounting firm had said 'continued reliance should no longer be placed' on its previous audit work. This month, China Forestry, a Hong Kong-listed forestry company brought to the stock exchange by investment banks UBS and Cazenove and Big Four accountant KPMG, said its former chief executive Li Hanchun had been detained by mainland authorities for alleged embezzlement. The forestry firm, whose shareholders include United States buyout house Carlyle, also drastically slashed the value of its plantations. Basil Hwang, Hong Kong managing partner of US law firm Dechert, said money managers were becoming less reliant on mainland companies' IPO prospectuses and audited financial statements. 'Investors are increasingly taking matters into their own hands and hiring private investigators,' he said. In March, Deloitte also resigned as auditor of Fujian-based China Media Express - a Nasdaq-listed firm that claims to be China's largest operator of advertising screens inside mainland inter-city buses - saying it could not rely on the company's financial statements. China Media is also being sued for alleged fraud by major shareholder Starr Investments, a firm run by former American International Group chief Maurice Greenberg. The US SEC has created a task force to probe potential fraud by Chinese companies listed on American exchanges. Hong Kong has also had its fair share of controversies. The Securities and Futures Commission won a court order in March last year freezing the HK$997.4 million proceeds of the Hong Kong IPO of Hontex International, a Fujian fabric maker. The regulator said that Hontex, whose listing prospectus was audited by KPMG, gave false information to entice investors to subscribe to its shares. The regularity of financial scandals involving mainland businesses raises questions over whether international auditors and investment banks have adequately adapted their due diligence processes for the mainland, where it can be more difficult to carry out the necessary checks on companies than it is in the West. At a Beijing conference in April, George Qin, partner at US auditor Malone Bailey, complained that some of his firm's former mainland clients had convinced bank staff to run up false bank statements. Dechert's Hwang also urged lawyers to play a bigger role checking out mainland companies before they launch an IPO. 'Perhaps lawyers can be more sceptical and attuned to social cues than auditors are,' he said. Goldman and Deutsche Bank declined to comment about Longtop. 47% The value that China Media Express' stock lost in four days after a research report termed the company a 'phantom'