This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Auditor Flees China RTO Universal Travel

NEW YORK ( TheStreet) -- Universal Travel (UTA), whose shares were halted earlier this week, became the latest Chinese small-cap company to announce that its auditor resigned after the firm had 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 Thursday.

Universal Travel had already divulged at the end of March that it wouldn't be able to file its 10-K on time and that it needed to cancel its previously scheduled earnings conference call. In a press release on March 30, the company said the delay "was not due to any accounting irregularities" and that it was merely to "allow l the Company and its independent auditors to complete their work on the financial statements and audit."

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 Thursday. 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 Universal Travel in 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."

Universal Travel was a Windes client only since Sept. 30. The firm resigned on Sunday, April 10, the company said. The NYSE Amex halted trading in UTA stock before the opening belll on Tuesday, April 12.

In its 8-K 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.

Investigating Chinese Reverse Mergers

Still, despite those issues, Universal Travel said it was able to secure the services of a replacement for Windes as its independent auditor: EFP Rotenberg & Co., an accountancy based in Rochester, N.Y. The hiring is "subject to the Company clearing their client acceptance procedures," Universal Travel said.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CIL $34.12 0.00%
CELM $0.12 96.72%
AAPL $95.03 -2.90%
FB $117.52 7.90%
GOOG $691.20 -2.10%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs