Wowjoint Holdings (BWOWF US)

Wowjoint was a manufacturer of lifting and carrying equipment. From 2009 until 2012, the company accelerated revenue recognition on a number of projects by accruing for costs that had not yet been incurred. This allowed Wowjoint to recognize 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[1].

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Protecting Investors through Audit Oversight’s report on the auditor.

[1] SEC Accounting and Auditing Enforcement, 6 Nov 2013

SEC: SEC Charges New York-Based Audit Firm and Four Accountants for Failures in Audits of China-Based Companies, 7 Nov 2013

Woodjoint Holdings: Annual Report 2013

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