Accounting Scandal Will Cost Ahold $117.2 Million

Dutch food giant Ahold will spend more than $117.2 million on the billion-dollar accounting scandal that has engulfed the world’s third largest retailer.

Ahold on Tuesday announced what it expected to pay in fees to lawyers, accountants and external consultants for 2003, along with unaudited third-quarter sales of $15.2 billion, which is down 7 percent from 2002.

The company predicted its earnings in 2003 would be hurt not only by the millions in professional costs, but by pressure on its margins, particularly at subsidiary US Foodservice.

The company had estimated worldwide accounting irregularities at more than $1 billion in 2000-2002, mainly because sales were inflated at US Foodservice. The company showed a loss of $5 billion under U.S. accounting rules when correct audited statements for 2002 were released last month.

Investigations into Ahold’s accounting procedures are being conducted by the U.S. Securities and Exchange Commission, U.S. Justice Department and Dutch regulators.

The accounting irregularities stem from local managers booking higher promotional payments—provided by suppliers to promote their goods—than they actually received. Ahold's U.S. business consists primarily of a distribution service that delivers food to restaurants, schools and prisons. Ahold also owns the Stop & Shop and Giant supermarkets.
The company also announced quarterly sales at Foodservice rose 6 percent, partly because of acquisitions made last year. Ahold said that only the weak dollar kept it from increasing sales companywide in the third quarter.
Audited earnings for the first half of 2003 are set to be released on Nov. 7.

You may like these other stories...

While reputational risk is the No. 1 nonfinancial concern among corporate directors, cybersecurity/IT risk is gaining steam. In fact, both private companies and organizations with more than $1 billion in revenue felt they...
We've all been there. Trying to make our work-lives more efficient, transfer knowledge to newer team members, and leverage our practices. Sometimes it works, and sometimes, well, the result is embarrassing at best.Here...
From May 20-23, the Association for Accounting Marketing (AAM) held its annual conference. Frequent contributor Sally Glick picked up some ideas that she will be sharing with us in the coming days, as she has done in...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.