SEC probes Lucent accounting practice
Allegations of revenue misreporting
An investigation into possibly fraudulent accounting at telecommunications equipment maker Lucent has been begun by the Securities and Exchange Commission (SEC), according to a report in today's Wall Street Journal.
The paper quotes unnamed sources "familiar with the investigation" who said the inquiry by the SEC's enforcement division will focus on whether Lucent improperly booked $679m in revenue during its last financial year, which ended on September 30.
Among Lucent business practices reportedly to be probed include its use of one-time discounts to clients and its reporting of software licensing agreements.
The SEC is also said to be looking at how Lucent recognised revenue on channel sales and how the company set revenue targets for fiscal 2000.
Lucent restated the revenues for the period under investigation in December after conducting its own investigation.
The Journal quotes Lucent spokeswoman Kathleen Fitzgerald who said the firm is co-operating with the investigation.
She said that Lucent has shared its finding which led to the revenue restatement with the commission and also given the SEC copies of an external audit conducted by PricewaterhouseCoopers and Lucent's outside counsel, Cravath, Swaine & Moore.
As previously reported, last month Lucent said it would shed 16,000 jobs and begin a seven-part restructuring plan to reduce its costs by $2 billion in an attempt to return its business to profitability. Announcement of the job cuts came when it announced a first quarter net loss of $395 million on sales of $5.84 billion. ®