Feeds

Tech Data: UK accounting errors cost us $27m

Distie giant restates 3 years worth of profits, beefs up fraud prevention weaponry

Securing Web Applications Made Simple and Scalable

Tech Data (TD) has turned to "external experts" to beef up fraud detection measures after it emerged that righting accounting wrongs at its UK sub had wiped $27m (£16.55m) off net profits for the last three years.

The restatement equates to three per cent of income made during fiscal '11, '12 and '13, the periods that forensic bean counters probed since the mistakes in vendor accounting surfaced in March. The reduction came in at the lower range of initial estimates of between $25m to $33m.

The Audit Committee of independent investigators, and outside counsel, found systemic failings in the UK and two European country operations

"These adjustments primarily correct errors from improper vendor accounting, improper use of manual journal entries, and improper recognition of foreign currency exchange transactions," said TD.

The abacus strokers found inadequate controls over manual journal entries; inadequate account reconciliation processes and inadequate anti-fraud programme controls and monitoring.

In response to the findings, TD said certain UK and Euro staffers "responsible for accounting improprieties" have been shown the door, though it stopped short of naming names.

The Audit Committee have written to all workers to remind them of "ethical matters" and the imperative to comply with laws, Code of Conduct and company accounting policies.

Compensation programmes are to be changed to "better motivate accurate financial reporting and compliance", and tools to document, support and review manual journal entires, and centralise control and finance processes will be introduced.

And in a bid to head off future incidents, TD has "engaged external experts to perform the internal audit function and to assist with the implementation of specific fraud detection procedures".

A Chief Ethics and Compliance Officer has been appointed to evaluate other ways to prevent a re-occurrence of a costly and embarrassing debacle, and in currently reviewing the business structure.

"The company is in the process of evaluating its organizational structure, and roles and responsibilities to enhance controls and compliance," said TD.

NASDAQ-listed TD had until the end of next month to report restated financials for the three fiscal years in question or be booted off it.

The distributor hopes to hold an Annual Meeting of Shareholders for fiscal '13 - which must usually be held within 12 months of a financial year-end - as soon as it can file numbers for fiscal '14, which ended last month.

The company intends to outline its position "with respect to this deficiency" to the NASDAQ Listing Qualification Panel by 10 February to seek an extension period to 30 June.

During this extension it will solicit proxies and hold an annual meeting.

The distributor reiterated that it expects a VAT dispute with the Spanish government will cost $55.6m in various penalties and interest repayments, and is included on the Balance Sheet for fiscal '13. ®

Build a business case: developing custom apps

More from The Register

next story
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Want to beat Verizon's slow Netflix? Get a VPN
Exec finds stream speed climbs when smuggled out
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Mobile application security vulnerability report
The alarming realities regarding the sheer number of applications vulnerable to attack, and the most common and easily addressable vulnerability errors.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.