DELL FINDS MISCONDUCT IN ACCOUNTING PROBE

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DELL FINDS MISCONDUCT IN ACCOUNTING PROBE

 user 2007-04-03 at 10:30:00 am Views: 39
  • #17593

    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.