Consulting firm BearingPoint Inc., the spinoff of KPMG's former consulting business, reported a $546.2 million loss for 2004 and said that it still faces liability issues under the Foreign Corrupt Practices Act.
In a nearly 2,000-page filing with the Securities and Exchange Commission, BearingPoint aired all of its dirty laundry, providing its long-delayed 2004 results and attempting to show it is moving on from its accounting troubles.
The critical filing includes details of government investigations, problems with management controls and the explanation for the more than $20 million that KPMG says it is still owed. Admitting that it may still face some liability for alleged bribes in China, BearingPoint did note that the company's audit committee uncovered the payments and gifts to current and former officials at state-owned companies in China, and the responsible subcontractor was fired last fall.
Also in the filing, the company said:
- It has paid about $51.4 million to settle lawsuits;
- It might face claims in the Enron case because of business taken over from Arthur Andersen;
- It has made $97.8 million in adjustments to previously announced results for July 2001 to September 2004; and,
- An investigation by BearingPoint's audit committee found internal controls need to be strengthened.
BearingPoint first disclosed its accounting issues in November 2004, when the company said that some of its invoices had been counted twice. Longtime chief executive Randolph Blazer resigned that month, and former Oracle Corp. chief financial officer Harry You took over the company in March 2005. He has said that the company spent more than $100 million to prepare its 2004 financial results and review the statements of the previous three years, and expects to report a substantial loss for 2005.
