Wowjoint was a provider of customized heavy duty lifting and carrying machinery. It was acquired by a blank cheque company in 2010 and listed on the NASDAQ. Financial performance immediately deteriorated, leading to a more than 95% decline in its share price over the next year, resulting in a de-listing. The company's auditor, Sherb & Co, was subject to an accounting auditing enforcement owing to auditing deficiencies. The investigation found that from 2009 until 2012, Wowjoint had accelerated revenue recognition on a number of projects by accruing for costs that had not yet been incurred. This allowed it to recognise 100% of the revenue on those projects even though the underlying machines had not been completed. There was a questionable relationship with a contract co-party which collected revenue for Wowjoint but it then failed to remit proceeds in a timely manner, resulting in a large and overdue receivable. No charges were filed by the SEC against Wowjoint but its auditors, Sherb & Co., were suspended in 2013 from auditing companies before the SEC. 

Last updated November 2021

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