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Xerox the latest Wall St scandal

Xerox is to restate its accounts for 1997-2001.
Xerox is to restate its accounts for 1997-2001.  


NEW YORK (CNN) -- In the latest in string of Wall Street accounting scandals, Xerox Corp. has announced it will restate its revenues by as much as $2 billion over a five year period because of an accounting error.

An audit showed that Xerox (XRX) improperly posted revenues before they were actually made.

On Tuesday, telecommunications giant WorldCom announced internal audit revealed the company had reported nearly $4 billion in profit last year and the first quarter of this year as a result of improper bookkeeping. (Full story)

Xerox spokeswoman Christa Carone told CNN that Xerox would restate the company's revenue for the five year period of 1997-2001.

She played down the problem, saying Xerox was not in a WorldCom-style scandal, and described the accounting problems uncovered by an audit as a "timing and allocation issue," saying the revenues that were posted early would be shown to have actually been collected later.

The Wall Street Journal reported an audit found that Xerox improperly booked far more revenue over a five- year period than the Securities and Exchange Commission estimated in an April settlement with the company over its accounting procedures.

The SEC had estimated in April the overstatement was $3 billion for the four years from 1997 through 2000, the report said, citing people familiar with the matter.

The Journal said the mispostings of revenue could total up to $6 billion. However, Carone disputed that. She said the restatement for that period will be "no more than $2 billion" which is about 2 percent of revenue for that period.

This is "different from what other companies are reporting," said Carone, because this is "not about factitious reporting of phoney revenue" and the revenue number at the end of the day will be the same.

She said its important that shareholders know that there is "no hit on the monetary value of the contracts" already signed and "no hit on the cash" position.

She had no comment on when the company will file its revised statements but that the company is on target to do so by the July 1 deadline.

The office equipment maker's stock sank $2.85, or 35 percent, to $5.15 in before-hours trading Friday. Its shares also tumbled in Europe.

The news came just three days after WorldCom revealed that it had misstated about $3.8 billion in expenses, inflating pretax profits, in the latest accounting scandal to rock Wall Street.





 
 
 
 





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