Retail drugstore chain CVS Corp. said the Securities and Exchange Commission has launched an informal probe into how the company accounted for a 2000 transaction.
In its annual report, CVS said an internal review completed this month had found that various aspects of its accounting for the transaction were incorrect. In December, the company's audit committee hired independent counsel to review the matter. The committee reported findings to the CVS board, after which the company's controller and principal accounting officer, Larry D. Solberg, and its treasurer, Philip Galbo, resigned.
The transaction in question involved accounting entries conveying some of CVS's excess plush toy inventory to a third party. The company also made a $12.5 million cash payment to that third party and received $42.5 million in barter credits in exchange.
CVS said the investigation is unlikely to result in any adjustments to the company's financial statements and that it continues to cooperate with SEC staff.
Chief financial officer David Rickard will serve as the interim principal accounting officer. One of the nation's largest drugstore chains, CVS has made several purchases of regional chains in recent years, including significant acquisitions in the Chicago and southern California markets in the past year.
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