The Securities and Exchange Commission has opened an informal inquiry into how Home Depot Inc. records the credits it receives from vendors for defective merchandise.
Home Depot, the largest home-improvement store chain, announced the inquiry and said that it had complied with the SEC's request for information on its return-to-vendor procedures. A spokesman declined to elaborate on the investigation.
When customers return defective merchandise, Home Depot sends it back to the vendor, which gives the company a credit to cover the cost. Home Depot said that those credits don't boost its net profit.
"Our internal financial controls related to vendor policies preclude any potential for a material adverse impact on the company," a spokesman said in a statement.
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