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AnonymousInactiveDell 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. -
AuthorApril 3, 2007 at 10:30 AM
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