China Growth Stocks

[Drexion2004]

TSTC: One accounting game that they do if I remember correctly, they actually disclosed this themselves I believe, relates to when they book revenue in the SEC and SAT. AFAIK, they book revenue in the SEC filings when they finish the work but on the SAT they book revenue when they get paid. Given the large DSO timeline between work completion and payment, this can lead to quite a difference. I can understand why they want to do this, since paying 25% tax on money you will only be paid in a year is a bit harsh on the working capital ;).

One issue I believe TSTC ran into when they tried to switch to QC CPA related to how they treated A/R over 1 year old and "bad collection allocations" on the balance sheet to account for that. TSTC, given that they have never had bad collections and the A/R comes from the Big-3 telecoms, would not have wanted to take such allocations -- leading to a big disagreement with QC CPA.

-Fernando