*NEWS*DELL:MISCONDUCT IN ACCOUNTING PROBE

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*NEWS*DELL:MISCONDUCT IN ACCOUNTING PROBE

 user 2007-04-03 at 10:29:00 am Views: 36
  • #17519

    Dell Finds Misconduct in Accounting Probe
    (APRIL 07) – Dell  Inc., after a lengthy internal probe of its accounting practices, Thursday said it found evidence of unspecified misconduct at the big computer maker. The company said the internal investigation also found a number of accounting errors and deficiencies in the financial control “environment” as part of the probe. Dell stressed that its investigation is not complete, however, and therefore said it will delay filing its annual 10-K report with the U.S. Securities and Exchange Commission, originally due April 3, past an extension date of April 18.Dell, which faces federal investigations into its finances and has been struggling to rebound from reverses in the PC business, added that restatements of prior financial results may be necessary once the probe is complete.”As we move toward the conclusion of our investigation, we are committing the time and resources required to ensure a thorough and comprehensive review and resolution of all identified issues and the implementation of appropriate remedial measures,” said Thomas W. Luce III, who chairs the audit committee of Dell’s board of directors, which has been leading the investigation.Dell’s announcement caused its shares to slide after-hours, following a brief halt in trading. The stock traded at 4 p.m. at $23.39, up four cents, and changed hands in after-hours trading following the announcement at $22.92.The Round Rock, Tex., company’s array of problems led in January to the departure of then-Chief Executive Kevin Rollins, who was succeeded in that post by Chairman Michael Dell , the company’s co-founder. In December, James Schneider was replaced as chief financial officer by Donald Carty, former CEO of American Airlines.In August 2006, Dell disclosed that the Securities and Exchange Commission had been informally investigating the company over its revenue-recognition practices, and said it launched the internal investigation into its financial accounting. By September, the company said the probe had expanded to unspecified issues “relating to accruals, reserves and other balance sheet items.” Dell also said it has been subpoenaed by the U.S. attorney for the Southern District of New York over its financial reporting.On Wall Street, speculation has focused in part on the company’s treatment of revenue from customer warranties. For example, Clay Sumner, an analyst at FBR Equity Research, in December published a report suggesting that Dell had not been setting enough money aside to cover potential warranty costs, thereby inflating its earnings.The company has declined to comment on that speculation, or provide additional detail about the precise focus of the investigation. It recently adjusted the wording of its public statements to state that the investigation focuses on issues related to “reserves and other balance sheet items” leaving out the word “accruals.” A Dell spokesman has said the change wasn’t based on any information gleaned from the probe.