Dell finds errors in accounting procedures

In the most serious admission yet of the extent of Dell Inc's financial woes, the company's internal audit committee said it has found a number of accounting errors and evidence of misconduct in its months-long review of previous earnings statements. In a short news release, the Round Rock, Texas, company said that the audit also found "deficiencies in the financial control environment." Dell shares fell 56 cents, or 2.4%, to $22.83 in after-hours trading, when the announcement was made. Dell also said it would miss an April 18 deadline to file its annual 10K financial report to Securities and Exchange Commission until the internal review is completed. The company added in the statement that it was working with management and the company's independent auditors to determine whether the errors would require the restatement of previous earnings reports. "As we move towards 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," Thomas W Luce III, chairman of Dell's audit committee, said in the statement. The company did not say how much longer the internal investigation would last, and further details were not provided. Dell spokesman Dwayne Cox said the company was unable to comment further. In August, company officials said Dell received a letter from the SEC in August 2005 asking broad questions about some revenue recognition. Company executives initially shrugged it off as an informal investigation and something that happens to hundreds of other firms. It has since grown into a formal look by federal investigators into Dell's finances. Dell also faces a slew of shareholder lawsuits, and the US attorney for the Southern District of New York has subpoenaed documents related to Dell's financial reporting since 2002. Dell's earnings statements from the second, third and fourth quarters remain preliminary and have yet to be filed with the SEC.

SOURCE : THE TIMES OF INDIA