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  "documentTitle": "Duoyuan Global Water Inc. (DGW)",
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  "notes": "This is a page from a Muddy Waters research report, specifically focusing on forensic accounting discrepancies.",
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      "kind": "callout",
      "text": "Grant Thornton has made an obvious error in its audit by not taking issue with DGW’s claims of having no work in process as of December 31, 2008 and 2009.",
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      "text": "The proper classification of the loan repayment is a cash flow from financing activities, rather than cash flow from operations. Neither company is a supplier or customer of DGW... the repayment should not be classified as a cash flow from operations.",
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      "text": "The SEC flagged the lack of work in process as an issue in September 2010. DGW responded to the SEC query by stating that starting in 2008, the Company “elected to complete production of then existing work in process and suspend manufacturing of all further work in process prior to the inventory count cutoff dates” in order to perform a complete physical inventory; however, this explanation does not hold water.",
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      "text": "Grant Thornton has made an obvious error in its audit by not taking issue with DGW’s claims of having no work in process as of December 31, 2008 and 2009. Interestingly, the genuine 2009 PRC audit report for DGW Langfang facility shows work in process of RMB 3.3 million (US$0.5 million) as of December 31, 2009. The forged audit report even shows work in process of RMB 1.7 million (US$0.2 million) as of December 31, 2008...",
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      "text": "and Huanan Duoyuan Water Supply Co. Ltd. DGW shows the repayment of the loan as an operating cash flow in its 2008 (again, the year before its IPO) financial statements.",
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      "text": "16 DGW F-1, p. F-15. 17 Genuine 2009 DGW Langfang PRC Audit Report, Notes to Financial Statements p. 6. 18 Interviews with US and Chinese manufacturers, Feb and March 2011. 19 Supra FN 8. 20 http://www.sec.gov/Archives/edgar/data/1465317/000095012310097028/filename1.htm, p. 3.",
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      "text": "Auditor Credulous of No Work in Process at Year End – We Are Not",
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