Muddy Waters, the short-selling firm which continues to accuse NQ Mobile Inc (ADR) (NYSE:NQ) of inappropriate accounting practices, is urging the Chinese company’s auditor to examine its books more closely. Carson Block, who heads up Muddy Waters, has been trying every tactic to get a peek at NQ’s books, including offering to pay for an independent audit of the company’s finances in order to clear it of his allegations.

NQ Mobile

Muddy Waters writes to NQ Mobile’s auditor

According to The New York Times, Muddy Waters sent a letter to PricewaterhouseCoopers, the accounting firm hired by NQ Mobile Inc (ADR) (NYSE:NQ). Carson Block maintains that NQ is a “massive fraud,” and he thinks the company’s accounting firm should demand to be allowed a closer examination of its books. According to Block, if NQ Mobile does not allow PricewaterhouseCoopers to complete a closer examination of its finances, then the accounting firm should consider resigning. The letter states that if PwC feels its brand is “worth preserving,” it should “take heed of the experience of other firms operating in China.”

That’s a reference to Sino-Forest, one of Muddy Waters’ past targets. The Chinese forestry company filed for bankruptcy months after Block called it a Ponzi scheme.

Block chips away at NQ Mobile

Carson Block has been pursuing his campaign against NQ Mobile Inc (ADR) (NYSE:NQ) for months. He called most of the company’s security revenue in China in 2012 “fictitious” back in October and also raised some questions about the company’s international revenue. Since he made his allegations, shares of NQ Mobile have been extremely volatile as the slightest bit of news has been enough to skip the scales in either direction. Right after Block’s first report, the stock was cut in half.

NQ Mobile Inc (ADR) (NYSE:NQ) continues to deny Block’s allegations. Meanwhile some big time investors have sided against Block and with NQ Mobile, like Boston-based hedge fund Altimeter Capital Management, which said this week in a regulatory filing that it increased its stake in the Chinese company to approximately 17.3%.

Bill Ackman writes to PwC about Herbalife

Interestingly enough, Carson Block isn’t the only short-seller to urge PricewaterhouseCoopers to more closely examine the books of one of its clients. Bill Ackman, who brought Herbalife Ltd (NYSE:HLF) into the public spotlight in December 2012 by announcing a major short position, appealed to the accounting firm last fall while it was completing the re-audit of Herbalife’s past financial statements. He sent a 52-page letter to PricewaterhouseCoopers alleging accounting problems at the nutritional supplements company.