Gemstar's Dispute With KPMG Goes to SEC
The dispute involves details of the company's financial results for the quarter ending June 30, 2002. On August 14, 2002, Gemstar said its audit committee has been conducting a review of the company's revenue recognition policies. Based on that review, management intended to reverse the recognition of approximately $20 million of revenues and $20 million of associated amortization expense. Both amounts relate to a non-monetary transaction of a subsidiary of TV Guide Inc.
According to Gemstar's announcement, KPMG has informed the company that it does not believe the information that had come to the audit committee's attention supports a change in the accounting treatment for this transaction. The firm also advised Gemstar that it will not be able to complete its SAS 71 review procedures until a final conclusion is reached regarding the restatement.
A KPMG spokesperson explained, "Whenever there is a dispute of this nature, we recommend that it be brought to the SEC's Office of Chief Accountant."
Gemstar is facing delisting for failure to meet the SEC's certification requirements. It was one of the 16 companies  unable to certify to the accuracy of their companies' financial statements by the August 14, 2002 deadline set by the SEC.