Universal Travel (UTA), whose shares have been halted since April 12, became the latest Chinese small-cap company to announce that its auditor had resigned after the firm raised accounting red flags.
The auditor, Windes & McClaughry, of Long Beach, Calif., ran across the alleged problems while auditing Universal Travel's 2010 financial results in preparation for filing its 10-K annual report with the Securities and Exchange Commission, the company said in a disclosure to the SEC late on April 14.Universal Travel had already divulged, back on March 31, that it wouldn't be able to file its 10-K on time. Windes couldn't immediately be reached for comment. A Universal Travel spokesperson, at the investor relations firm Christensen, didn't respond to a request for comment. The problems Windes allegedly found were described vaguely by Universal Travel in its 8-K disclosure filing. For example, Windes told the company before it resigned that it had run into "issues related to the authenticity of confirmations" as well as "lack of evidence of certain tour package contracts and related cash payments," according to the 8-K. Windes also suffered a "loss of confidence in confirmation procedures carried out under circumstances which Windes believed to be suspicious," the 8-K said. Windes decided to quit when "it was no longer able to complete the audit process," according to the 8-K. "Windes stated this was due in part to Management and/or the Audit Committee being non-responsive, unwilling or reluctant to proceed in good faith and imposing scope limitations on Windes' audit procedures." In the filing, Universal Travel disputed Windes' claim that it had blocked the firm's ability to conduct the audit. "We believe that we have acted responsively, prudently and in good faith to address the numerous issues raised by Windes during the entire audit process," the company said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV