San Antonio (Feb. 9, 2004) -- A top executive of Lancer Corp., which has been accused of "illegal acts" by its former outside auditor amid an investigation into its dealings with Coca-Cola Co., is standing by the findings of an audit committee investigation that found no evidence of accounting irregularities, according to published reports.

Lancer president and chief operating officer Christopher D. Hughes said he was "surprised and obviously disappointed" by the Big Four firm's conclusions and defended the audit committee's investigation as "exhaustive," The Wall Street Journal reported.

KPMG, Lancer's former outside auditor, resigned last week and told the company's audit committee that it would withdraw its opinion on the company's financial statements for 2000, 2001 and 2002. In a letter delivered Feb. 2, KPMG said Lancer didn't take "timely and appropriate remedial actions with respect to the illegal acts." The audit firm didn't specify what the purported "illegal acts" were.

However, Lancer's audit committee said last week that its independent investigation, conducted by Baker Botts LLP and PricewaterhouseCoopers, "did not identify or develop evidence sufficient for the audit committee to conclude that any members of Lancer's management engaged in any intentional misconduct in connection with the matters under investigation, nor did it identify or develop evidence sufficient to support the allegations regarding accounting irregularities."

Some of Lancer's dealings with Coke have been under investigation by the U.S. Attorney's office in Atlanta and the Securities and Exchange Commission following allegations made last year by a former Coke auditor.

-- WebCPA staff

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