Ongoing Investigation Forces Dell to Delay Quarterly Report

By Scott Ferguson  |  Posted 03-29-2007

Dell is delaying the filing of its fourth-quarter financial report as the PC vendor continues an internal investigation into its own accounting and financial practices.

In a March 29 statement, the Round Rock, Texas, company revealed that its own internal auditing committee had found a number of accounting errors, evidence of misconduct and deficiencies in the way the company's finances were controlled.

"As we move toward the conclusion of our investigation, we are committing the time and resources required to ensure a thorough and comprehensive review and resolution of all identified issues and the implementation of appropriate remedial measures," said Thomas Luce, the chairman of Dell's Audit Committee, in a statement.

As of result of the March 29 announcement, Dell will delay the filing of its fourth-quarter financial report with the U.S. Securities and Exchange Commission.

The company's fourth financial quarter ended Feb. 2, and Dell was scheduled to file its 10-K report either on April 3 or on the extension date of April 18. In its statement, Dell did not indicate when that report would be filed with the SEC.

Dell's internal financial problems date back to the middle of 2006, when the company first announced that the SEC had begun an inquiry into its accounting practices. Later, the company also announced that it received a subpoena from the U.S. Attorney's Office for the Southern District of New York.

As a result of these various ongoing investigations, Dell has also not filed SEC reports for its second and third fiscal quarters.

In addition to the outside probes by the SEC and federal prosecutors, Dell has watched as Hewlett-Packard has chipped away at it dominance in the PC market. On Jan. 31, CEO Kevin Rollins resigned as the company's CEO and Michael Dell took back control of the company that he founded 25 years ago.

Click here to read more about Michael Dell's return as CEO.

In its statement, Dell said it would continue to work with outside auditors to find the root of these financial problems and determine what safeguards should be added to secure the company's accounting practices.

The company's statement also left open the possibility that Dell would have to reinstate several of its previous financial statements.

"The Audit Committee is working with management and the company's independent auditors to determine whether the accounting errors necessitate any restatements of prior period financial statements, and to assess whether the control deficiencies constitute a material weakness in Dell's internal control over financial reporting," according to Dell's statement.

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