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His advice to LDK would be to err of the conservative side, removing any questionable inventory from its books until it becomes usable.

But he added the company has been "reasonably forthcoming" about the issue and most companies include "nonvirgin" silicon (read: used silicon) in their inventories.

The stock reaction has less to do with the quality of LDK's silicon inventory and more to do with general market perception that solar stocks and Chinese stocks are in a frenzy, Bradford said.

"At this point, it's commonly believed that the investment in these stocks is in a bubble mentality, but nobody knows when that bubble's going to burst, and so small anxieties become panics," he said.

Wider Implications

The company's troubles could have wider implications for the industry, including the potential for an even tighter silicon shortage than expected and the possibility of more detailed disclosures about silicon inventories in the future, analysts said.

Mints said the situation shows that people need to be "more suspicious" about companies' claims.

"There are a lot of issues of poor quality wafers and cells coming out of China," she said. "It isn't a surprise to anyone in the industry - although the scale [of this situation] is. … It's an indication that more research needs to be done on every company, but - unfortunately - especially on the companies in China."

A number of industry forecasts are based on the idea that there will be a "huge glut" of product coming from China, Mints said.

If the LDK situation is an indication that glut might not arrive, it means those forecasts will need to be revised, she said.

Cox said investors and analysts are definitely going to have more questions about other companies' silicon inventories now.

"This is going to go through the entire industry," he said. "People are going to want to find out how everybody manages their silicon inventories."

Even if LDK's accounting turns out to be common practice, it highlights a lack of clearly defined standards for accounting of all the different types of silicon used in the solar industry.

As in the oil industry, where companies have to figure out how much of their stockpiles are "recoverable reserves," silicon accounting isn't cut and dried, Bradford said.

"Accounting questions are never clear," he said. "It all comes down to perception and accountability, based on a valuation. The assumption is the inventory is worth at least what you paid for it. If you discover it's worth less than what you paid for it, you have to take a write-down."

If the issue proves to be more widespread than just LDK and relevant to the industry, Bradford said companies could well be asked to separate out different types of silicon in their reporting.

But if the silicon shortage ends and more virgin silicon becomes available, the issue might not be large enough to matter, he said.

Toward the end of the call, Lai said that after the independent audit is complete, the audit committee will review it along with the results from LDK's internal investigation and form a conclusion. Then, the company's lawyer will draft a report to file with the U.S. Securities and Exchange Commission.

With so much at stake, you can be sure investors - along with the industry as a whole - will await the independent audit with bated breath.