Smith-Midland Corporation (SMID), a maker of precast concrete products for the construction, highway, utilities, and farming industries, did not file its annual report on time, blaming the delay on needing more time to complete its annual audit. When it filed two weeks later, Smith-Midland acknowledged a problem related to bad receivables:

“The Company identified a material weakness in the methodology initially used to estimate the allowance for doubtful accounts related to the fourth quarter 2022.”

Though Smith-Midland’s billed receivables increased 62% year-over-year (YOY), the bad receivables allowance jumped 78.7%— significantly outpacing sales, which fell 1.0% year-over-year (YoY).

Smith-Midland’s auditor also flagged bad receivables as a critical audit matter (CAM). In previous years, the auditor flagged Smith-Midland’s valuation of receivables as a CAM.