Dell restates financials; Says books were cooked

Dell restates financials; Says books were cooked

Summary: Dell is putting some past accounting issues behind it.Dell said Thursday that it will restate its financial results for the last four years and first quarter of fiscal 2007.

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TOPICS: Dell
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Dell is putting some past accounting issues behind it.

Dell said Thursday that it will restate its financial results for the last four years and first quarter of fiscal 2007.

The news comes as Dell wraps up a long audit.

In a statement, Dell said it found evidence of cooking the books to make quarters.

The investigation, which began August 2006, involved more than 375 professionals deployed across all the company's major regions. The investigation team evaluated more than five million documents, conducted more than 200 interviews of company personnel and reviewed thousands of journal entries and supporting documentation.

The investigation raised questions relating to numerous accounting issues, most of which involved adjustments to various reserve and accrued liability accounts. The investigation identified evidence that certain adjustments appear to have been motivated by the objective of attaining financial targets. According to the investigation, these activities typically occurred at the close of a quarter. The investigation found evidence that, in that timeframe, account balances were reviewed, sometimes at the request or with the knowledge of senior executives, with the goal of seeking adjustments so that quarterly performance objectives could be met. The investigation concluded that a number of these adjustments were improper, including the creation and release of accruals and reserves that appear to have been made for the purpose of enhancing internal performance measures or reported results, as well as the transfer of excess accruals from one liability account to another and the use of the excess balances to offset unrelated expenses in later periods. The investigation found that sometimes business unit personnel did not provide complete information to corporate headquarters and, in a number of instances, purposefully incorrect or incomplete information about these activities was provided to internal or external auditors.

Dell concluded that it didn't have proper controls in place to keep the aforementioned behavior in check. It has said remedial action is underway to prevent these problems in the future. Dell said it will address its leadership, personnel actions (such as firing), structure and processes going forward.

Meanwhile, the SEC's investigation of Dell continues.

Topic: Dell

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35 comments
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  • Goodbye Dell, nice knowing you

    This isn't a good thing at all. With all the problems in the past there is a big hammer waiting to take vengeance on this type of behavior.
    voska
    • Have little effect on Dell

      Investors and the SEC will look at this as Dell's "New Management" doing what "needs to be done". Fire those that did this, pluss add a little oversight by the SEC, and things will turn out OK. Stock pretty much at what it was 5 days ago before the anouncement.
      John Zern
      • Agreed (nt)

        nt = no text
        CobraA1
    • You are an unrealistic idealist

      There is NO big hammer, exploitation is now the name of the game, charge lots, market lies, give them whatever they want to hear and let's just collect as we gave no warranty, no guarantees that hold water and if you don't believe it, just hanker down and read the license terms and conditions. Lol, now how much of it did you comprehend ? Well, nice try but no soap as you really don't see what's going on with the legislators and politicians who are not accountable. Trust me, there is more to getting fat than just their stomachs and their wallets.
      intrepi@...
  • So much for SOX compliance

    As if Technology is responsible for lying. The problem is people, not technology.
    doug@...
    • I'd say this is all about...

      Sarbanes-Oxley compliance. This audit was begun in August 2006, just about the
      time of the management overhaul that brought Michael Dell back in January 2007.

      One of the provisions of Sarbanes-Oxley is that management has to sign off on the
      financials, which was never required before. The threat of personal liability
      probably started the audit.
      msalzberg
  • So that explains the Linux numbers

    ;-)
    tonymcs@...
    • Linux had nothing to do with it

      This explains nothing so don't waste your time trying to imply it does as Linux had nothing to do with Dell misleading their investors or cooking their books. Can't imagine what ever made you think it did but one liners seldom explain anything, they just show the ignorance of the one making the assumption.
      intrepi@...
  • This is proof that SOX works...

    This - late that it is, is proof that SOX works. The real issue is why Dell's auditor's of past never caught these problems and that still needs to be resolved.

    Todd Glassey CISM CIFI
    TSGlassey
    • Jail Time Coming

      So will the SEC filings cause the feds to charge the last CEO with criminal charges?

      I wonder if they ask for some of the illegal gotten stock profits back from the company? If you lie on your stock filings, then you earn money on the stock then that is all a lie. Basically it is fraud and money laundering. Feds probably have some more technical legal jargon for this. I would at least expect some heavy fines.
      ceh4702
      • That's very true!

        The previous CEO and International sales manager of Computer Associates are doing jail time at the moment for doing the same. And the fines imposed got rid of their ill gotten gains.

        I think more corporate high flyers should be made accountable.
        Didn't Larry Ellison get off?
        I am Gorby
      • Yes the heavy fines will line the coffers

        Dell isn't anybody or anything special, MS has shown them how to exploit people for years and they aren't accountable. Countless others have been doing it for decades and where did it lead ? The fatter politicans who have dipped into the back pockets of these low life's is nothing new either. There is no accountability for politicians in Canada nor the US as proof who was held accountable for the Vietnam war ? The Iraq war ? The deportation, captivation and torture of who knows how many prisoners ? This isn't 3rd world countries I'm talking about ! This is our self righteous, holier than thou low life politicians we have in both Canada and the US. Support them if you want, any way you want, I will too if it's holding them up on a cross while they burn !
        intrepi@...
  • Explains....................

    ............why Dell Service has been non-existent. Too busy cooking to answer the phone
    BioEd2002@...
  • Tame

    Unless there were some HUGE changes to the bottom line, this sounds like pretty tame stuff. Many businesses move accruals and reserves around to "dampen" the effect of swings to the bottom line.

    While I am not defending or supporting it, I am confident that it is commonplace.

    If Dell has addressed or is addressing the issue, this sounds like something of greater concern to the media on a slow news day than a major event.
    Deacon336
    • A drop in the bucket....

      "Dell's reported net income will be reduced by between $50 million and $150 million -- only a fraction of the $12 billion it earned in that restatement period. "

      No biggie.
      rzrwire@...
  • The front door to Dell and others too.

    There's a door to Dell. On this side is a computer
    and a customer. On the other side is an accountant
    and a spreadsheet. As long as the computer works,
    the accountant's land is a far away place that one
    can only imagine and frankly doesn't care about.
    trm1945
  • Enron anyone?

    This is gunna be a big deal and it will come back!

    I live in Austin Texas home of Dell. I see a huge housing crash in the near future.

    The front page of the paper this morning had an article, However, it was so small I dont think anyone noticed on there way to work at one of the 5 (that I can think of) Dell plants in Round Rock (North Austin).

    More over, does this mean more jobs to be moved over seas or across the border? And on that same note, what about those economies? World Wide Ripple?

    If Michael Dell already took home those pay checks that were based on those numbers, and he no longer sits at the head of his namesake round table, How do they get that money back? And the stock holders (who lost money before this anyway) who sold and got out fast, they cant loose more when the numbers are re-listed. Where does all the money come back from? From the employee pension funds that were stolen from to begin with or NOWHERE!
    Dell is dead and I hope HP steps in to buy up the pieces for 15 cents on the dollar. The other large company here is AMD, and they are looking bad too, after the "unprojected extra cost" of their recent acquisition ATI.

    Game Over Austin.
    wesmantx05@...
  • A BUNCH OF ENGINEERS GOT TOGETHER

    And brought the Dell computer into existence.Then they went berserk.That's that high intellect turns evil stuff.It's metastable at the top guys!
    BALTHOR
    • What Engineers??

      Michael Dell got his start selling grey market PCs from his dorm room until he figured he could source generic white boxes from Taiwan and sell them direct. Dell is a marketing story, not an engineering story. You must be thinking of Apple, Sun or HP.

      I doubt all the engineers at Dell could form a basketball team.
      JackPastor
    • Actually it's pretty common accounting practices

      Nobody went berserk, the bean counters got together and said "now how can we get the books to say what we want them to say." Every international company does it, just once in a while one steps over the nanometer thin fine line and gets caught.
      mad tabby