More Debits & Credits Posts

Nortel Rushed Its Earnings Release

February 13, 2012

A Canadian courtroom has been the scene of a prolonged trial of former executives of Nortel Networks, in the biggest accounting fraud case to hit the country since the Livent trial.

The trial has been playing out since mid-January and is expected to last up to six months. In the latest action reported in the Canadian press, jurors in the Toronto courtroom heard about how the former telecommunications giant issued a 2003 restatement of its earnings, restating nearly $1 billion in liabilities.

The restatement was rushed out, even though outside auditor Deloitte & Touche wanted more time to review it, according to the Toronto Star. The restatement later needed to be revised. “We weren’t done scrubbing the books and looking at the documentation,” former assistant controller Karen Sledge testified. “We felt that we had rushed into the press release, but I felt that it was fairly accurate.”

However, the auditors argued with Dunn that the accounting was not done in accordance with GAAP. The CEO and other executives were fired in 2004 and charged with fraud in 2008.

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