After warning its new auditor needed more time before blessing its financial statements before filing its annual report Universal Stainless & Alloy Products (USAP), a maker of semi-finished and finished specialty steel products, revealed control deficiencies that indicate its reported revenue figures cannot be trusted.

In detailing multiple control deficiencies impacting its financial statements, Universal acknowledged the potential for a top line misstatement:

“Management did not design and maintain effective internal controls over certain business process cycles, including revenue and receivables, purchasing and payables, inventory, payroll, income taxes and financial reporting.”

In the previous year’s annual report, Universal’s management concluded its internal controls over financial reporting (ICFRs) were effective. That year marked the twentieth and final year the company’s long time auditor, Schneider Downs & Co, would scrutinize the company’s financial statements.

Schneider Downs & Co quit midway through 2023.

The deficiencies were suddenly identified after the company’s new auditor, EisnerAmper LLP, took over.

Universal suggested in its annual report its financial statements are accurate.

The new auditor gave Universal’s financial statements a clean opinion.

In return, Universal’s latest Proxy statement— filed less than two weeks after the late annual report— revealed Universal paid its auditor neary $1.2 million in 2023, or 142.2% more than the previous year.

The company says it’s fixing its controls and its accounts will be “consistently documented”.