The wildfire of accounting controversies engulfing Enron Corp. and tech-sector companies such as WorldCom Inc. is scorching another company, according to a report Friday in the Wall Street Journal, which said that Xerox Corp. could have to restate its 1997 to 2001 earnings to the tune of more than US$6 billion.
The restatement could come as early as Friday and is the result of an audit ordered by the company of its books for 2001 after a U.S. Securities and Exchange Commission (SEC) investigation into the company's 1997 to 2000 earnings, according to the Journal. The SEC investigation, which was settled in April, found that the company would have to restate its earnings from 1997 to 2000 by $3 billion, but after a second audit, this one ordered by the company and focusing on 2001, the total may rise to more than $6 billion, the Journal wrote, quoting sources close to the situation.
However, the Journal also reported that the revised revenue figure for 1997 to 2001 will likely appear to be less than $6 billion as most of the company's trouble came from booking revenue too early. Much of that revenue was realized by the company at later dates, the report said.
A Xerox spokeswoman contacted by the Journal said that the total restatement would be less than $2 billion.
Representatives of Xerox, which is based in Stamford, Connecticut, were not immediately available for comment on the Journal article.
The company has already paid the SEC a fine of $10 million as a settlement for its previous accounting troubles.
The Xerox news comes on the heels of Tuesday's announcement from struggling telecommunications company WorldCom that the company would have to restate its earnings for 2001 and the first quarter of 2002 due to accounting irregularities. The total restatement that WorldCom will need to make for that period will come close to $4 billion.
U.S. President George W. Bush on Wednesday called WorldCom's announcement "outrageous" and promised that "we will fully investigate and hold people accountable for misleading not only shareholders, but employees, as well."