NQ Mobile Inc (ADR) (NYSE:NQ) continues to be at the center of a controversy sparked by short-selling firm Muddy Waters, but investors don’t seem to care. The day after NQ said it had dismissed its auditing firm PricewaterhouseCoopers (PwC), Muddy Waters chief Carson Block is again raising questions about exactly what happened.

NQ Mobile

Why NQ Mobile dismissed PwC

When NQ Mobile finally announced the results of its independent investigation into Block’s allegations of fraud, the company said its committee found no evidence of anything being wrong. However, the company also said the committee noted that there were some missing documents. Although NQ’s press release this week states that there were no disagreements between PwC and NQ that caused the company to fire the firm, other statements made in the press release may raise some eyebrows.

For example, the press release seems to indicate that PwC took issue with the fact that there were so many missing documents. The firm did not issue an audit opinion after the relationship with NQ ended. PwC apparently wanted to see documents NQ Mobile says it didn’t actually have and that it might request even more information based on what was in those documents. It rather sounds like NQ fired PwC because it didn’t want to or otherwise can’t produce the documents in question, according to Block.

“PwC’s refusal to issue an audit opinion results from the fact NQ is a fraud,” Block told ValueWalk in an emailed statement. “By not issuing any opinion, PwC effected a backdoor resignation that attempts to save face for its client, NQ.”

Digging into NQ Mobile’s press release

Some of the statements in NQ Mobile’s press release may seem rather questionable to some. For example, PwC had previously told NQ that it needed to expand the scope of its investigation. And this latest press release states that the findings of that expanded investigation could cause PwC “to be unwilling to rely on management representations in connection with its audit work.” And then there’s this statement:

“The Audit Committee has concluded that PwC’s proposed procedures may create risk for the Company with respect to the Company’s obligation to file its Form 20-F for the year 2013.”

The question now is why PwC’s procedures might “create risk” for NQ Mobile. Of course it could be as simple as pushing back the timing of that annual report yet again, but it’s unclear.

NQ Mobile hires Marcum Bernstein Pinchuk LLP

To replace PwC, NQ chose Marcum Bernstein Pinchuk LLP. Some consider Drew Bernstein to be one of the world’s greatest fraud auditors. Bernstein has faced off with Block before, regarding Orient Paper in 2010. Block’s firm accused the paper maker of overstating its revenue in the two years before. At that time, Bernstein was chairman of Orient Paper’s audit committee.

Back in November, Bloomberg reported that some “experts” said Block was right to focus on the length of time it takes to collect payments from customers. They backed him up, calling a long period of time to collect payments a glaring red flag for fraud.

However, Bernstein apparently doesn’t agree, suggesting that he might be more likely to side with NQ than PwC was after its investigation.  In that same article, he defended the length of time it takes for NQ Mobile to see payments from customers. He told Bloomberg that it just takes longer for bigger customers to make their payments. He said he’s seen some Chinese companies take up to two years to pay. At the time of that story, Bernstein said he had met with NQ Mobile previously but that the company hadn’t retained his firm. Of course that’s changed now.