By Ben Strubel of Strubel Investment Management, LLC
The red flags surrounding Universal Travel Group (UTA) are numerous. First, there is the company’s musical chairs approach to auditors; UTA has been through three auditors in one month. On September 1, the company dismissed Acquavella Chiarelli Shuster Berkower (ACSB) and hired Goldman Kurland Mohidin (GKM. Then, on September 29, GKM resigned and the company hired Windes & McClaughry. That is three accountants in one month. Second, the latest 10K reveals that auditors ACSB found material weaknesses in internal accounting and financial controls. The auditors’ opinion states it plainly: “The following material weaknesses were identified: The Company’s policy documentation of all controls identified during their assessment and remediation process was incomplete. Lack of technical accounting expertise among financial staff regarding US GAAP and the requirements of the PCAOB, and regarding preparation of financial statements.“ The third previous red flag identified is the company’s nonfunctional travel booking site. We won’t dive into these three issues here as they have been explored elsewhere, including Bronte Capital’s blog.
