Motive has dropped Ernst & Young as its independent auditing firm after its audit committee conducted an investigation into its own past accounting practices, helped by a law firm that hired PricewaterhouseCoopers.
The company, which provides management software for broadband and mobile communications services, detailed in an 8-K filing some of the issues it encountered with Ernst & Young. An E&Y partner disagreed with Motive's accounting for four software license agreements with four different customers under a reseller agreement between Motive and another company it was acquiring called BroadJump.
E&Y also told Motive that the company did not have effective internal controls over financial reporting when E&Y was preparing to do an audit. E&Y complained of "management's intentional misrepresentation and omission from the financial statements of material facts surrounding a reseller transaction."
A report by the law firm that hired PwC criticized the company's former management for exerting excessive pressure to close deals, whether or not they had been accounted for properly. In January 2006, the audit committee said it had lost confidence in CEO Scott Harmon and CFO Paul Baker, and they subsequently stepped down.
Motive said it would restate financial statements going back to 2001, but did not say when they would be available. However, unaudited financial statements for 2005, 2006 and the first half of 2007 will be released by August 31.
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