New York (April 11, 2002) -- Signaling plans to broaden its case against Xerox, the Securities and Exchange Commission has reportedly informed two former Xerox executives and former Xerox auditor KPMG LLP that it may file civil charges against them, The Wall Street Journal reported.Michael Conway, a KPMG partner who co-headed the Xerox audit, former Xerox Chairman Paul Allaire and former Chief Financial Officer Barry Romeril are reportedly among at least a half-dozen individuals who've received so-called Wells notices, WSJ said. The SEC's Wells notices inform potential targets that the agency's enforcement division is inclined to recommend to the full SEC that civil charges be filed against them. Xerox fired KPMG as its auditor six months ago.
Xerox April 1 agreed to pay a $10 million civil penalty -- reportedly the largest ever by a company for financial-reporting violations -- and restate its books back to 1997 to settle SEC charges that include fraud. It neither admitted nor denied the allegations.
Last week, the copy maker said its restatement could involve reallocating more than $2 billion of revenue recorded from 1997 through 2000. This will be Xerox's second restatement in a year, according to WSJ. Last June, it restated results for 1998-2000, after saying it had "misapplied" certain accounting rules. The company said it had used a $100 million reserve for merger costs in a way that made operating profits look better in later quarters, WSJ reported.
KPMG spokesman George Ledwith confirmed that the firm has been talking with the SEC "about the possibility of a proceeding against the firm" related to Xerox. "We have told the SEC that we cannot fathom the basis for any such proceedings," Ledwith told the paper.
--Electronic Accountant Newswire staff
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access