EPSON SAYS BRAZIL & MEXICO UNITS INFLATED PROFITS

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EPSON SAYS BRAZIL & MEXICO UNITS INFLATED PROFITS

 user 2009-03-02 at 11:55:32 am Views: 65
  • #21445

    http://www.bloomberg.com/apps/news?pid=20601101&sid=aVbLZJQZvqKg&refer=japan
    Seiko Epson Says Brazil, Mexico Units Inflated Profit
    MARCH.
    09 — Seiko Epson Corp., a Japanese office equipment maker, said its
    Brazil and Mexico units inflated profit by about $46 million.The Suwa,
    central Japan-based company’s Brazilian subsidiary overstated profit by
    $42 million over a nine-year period, while its Mexico unit improperly
    reported $4.1 million in net income over four years, Seiko Epson said
    today. The employees responsible for the deliberate accounting
    manipulation have either been fired or demoted after an investigation,
    it said.

    Seiko Epson delayed reporting nine-month earnings on
    Jan. 30 until today after the company announced it had identified
    “inappropriate accounting” at a Latin American unit. The company will
    book a loss of 4.4 billion yen ($45.4 million) in the fiscal year
    ending March 31 to reflect the impact, it said.“The direct cause of the
    improper accounting practices is believed to be the desire of those
    involved to protect their positions,” Seiko Epson said in the
    statement. “However this situation was made possible by the weakness of
    internal controls at Epson companies in Brazil and Mexico.”The
    investigation found three employees in Brazil overstated accounts
    receivable to cover up an error in reconciling local and U.S.
    accounting standards, while one in Mexico inflated the receivables to
    give the impression the amount of money overdue was declining, the
    company said.Seiko Epson said nine-month profit fell 47 percent after
    the yen strengthened and on lower earnings at its semiconductor and
    liquid-crystal-display businesses amid the global recession.

    Nine-Month Earnings
    Net
    income fell to 11.9 billion yen in the nine months ended Dec. 31 from
    22.2 billion yen a year earlier, the company said. Sales dropped 13
    percent to 906 billion yen, compared with 1.04 trillion yen a year
    earlier.The company on Jan. 30 cut its forecast for the year ending
    March 31 to a net loss of 4 billion yen on sales of 1.14 trillion yen.
    That compares with 19.1 billion yen profit and revenue of 1.35 trillion
    yen a year earlier.Seiko Epson gained 6.6 percent to close at 1,127 yen
    on the Tokyo Stock Exchange before the announcement, trimming the
    stock’s decline this year to 20 percent.