Veritas to restate three years of results following improprieties
Veritas to restate three years of results following improprieties
Veritas Software has been dealt a blow after it uncovered a series of accounting errors that took place under the company's former CFO, prompting the company to delay filing its annual report for 2003 and restating its financial results for 2001 and 2002.
An internal investigation by the storage software maker, assisted by independent legal and accounting experts, identified improper accounting for some transactions during 2001 and 2002, the consequences of which spilled over into 2003.
The adjustments to be made will mean that the company's revenues for 2003 will decrease by US$10 to US$15 million. This will not trouble Veritas, as this amount will be subtracted from revenues totalling US$1.77 billion.
What will be of some concern to the software maker is the fact that the delay in the publication of its 2003 results may result in the company's shares being delisted from the Nasdaq Stock Market. The company expects to remedy the situation before Nasdaq delists its shares but has admitted that there is no guarantee that Nasdaq will grant a request for continued listing.
While Veritas has dealt with this situation in the correct manner, with the perpetrators of the accounting errors no longer at the company, news of the setback prompted a slight case of the jitters among investors who still have fresh memories of shoddy corporate accounting practices in recent years at other companies, causing Veritas' shares to slide by US$1.87 to US$29.14.
Veritas' former CFO Kenneth Lochnar, who is being blamed for the irregularities, resigned from the company in October 2002 after Veritas' CEO Gary Bloom discovered that he had not received a Stanford University MBA which he claimed he had on his resume.
While the audit found that the impropriety was not prompted by Lochnar's resume fraud, Bloom said the company's accounting practices had improved substantially since Ed Gillis took the reigns as CFO in November 2002.
"While today's announcement is unfortunate, it does not change the fundamental strength of our business, as we drive the company to a target of $2 billion revenue in 2004," said Bloom.
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