The financial confusion at e-business software developer Ariba Inc has deepened following the announcement that it will now have to restate its fiscal 2000 figures and 10 quarters of results. This follows an earlier announcement that it would have to restate its fiscal 2001 figures.

The troubled started when an internal review began on December 21, and identified a transaction of $10m made in March 2001 between two officers of the company - chairman and co-founder Keith Krach and the then president and chief operating officer Larry Mueller.

Now it seems that the Sunnyvale, California-based company also failed to record as costs $1.2m worth of chartered-airplane services provided by Krach to Mueller. Ariba didn't record the payments as expenses, and the company declined to give details on the flights or their purpose.

It is irregular for a chairman, and not the company, to cover these expenses, as Securities and Exchange Commission rules state that payments by a principal shareholder (in this case Krach) to executives (in this case Mueller) must be treated as expenses paid on behalf of the company. This is to prevent lower costs being used to improve a company's results, and hence bolster its share price.

Additionally, Ariba has discovered that certain stock options issued to a small number of individuals by companies acquired by Ariba during fiscal 2000, should be accounted for as stock-based compensation expense to Ariba, rather than amortized as goodwill. This will mean an increase in non-cash stock-based compensation expense, and a reduction of goodwill amortization expense will be reflected in Ariba's restated results for 2000, 2001, and 2002.

Ariba also announced that it has missed the December 30 deadline for filing its fiscal 2002 statements (10-K annual report) with the SEC, and will not do so until the completion of the review. As such, the company faces a possible delisting from Nasdaq. However, given that Ariba has a market capitalization of $855m, it seems likely that Nasdaq may bend the rules for a company this big.

Shares in Ariba fell 30 cents, or 8.6%, to $3.20 as of 5pm GMT on the Nasdaq Stock Market.