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09 Feb 2009
Corporate reseller Insight Enterprises has admitted the discovery of historical accounting errors dating back to 1996 will force it to restate previous results.
The revelation came as the US-based firm announced preliminary unaudited results for full-year and fourth-quarter 2008 and issued a bleak forecast for the year ahead.
Preliminary fourth quarter sales fell 10 per cent to $1.16bn (£780m) year-on-year, while net profits from continuing operations slid from $23.8m to $5.4m. Insight also expects sales and profits to fall in 2009.
Further reading
In EMEA, net sales for the quarter decreased 19 per cent to $329.2m.
The VAR added that, following an internal review, management had identified errors in the way it historically accounted for certain aged trade credits dating back to 1996.
Insight expects this will lead it to restate financial statements including in its 2007 annual report and quarterly reports for the first three quarters of 2008. It also expects the restatement process to include a material reduction of retained earnings as of 31 December 2004, related to the accumulation of such errors in prior periods.
The cumulative restatement effect is expected to be $50m to $70m and Insight indicated that the final settlement of these liabilities may take multiple years.
Rich Fennessy, chief executive at Insight, said: “Insight is committed to fairly and completely addressing the impact of our historical accounting practices and to putting this matter definitively in the past.
“In fact, Insight has already made a number of important changes in our finance activities, including new management in certain key finance roles, as well as updates to our systems and policies to ensure the company’s accounting practices are fully compliant going forward.”
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