Giant Retailer Reeling From Accounting Scandal | AccountingWEB

Giant Retailer Reeling From Accounting Scandal

Dutch consumer giant Royal Ahold, the world's third largest retailer after WalMart and France's Carrefour SA, has announced an accounting irregularity in its U.S. division that amounts to at least $500 million. The company plans to restate financial statements for 2000 and 2001 and has indicated it will hold back its 2002 financial statements, originally expected to be released next week.

While a spokesman for Ahold's auditor Deloitte & Touche said, "We stand by the work we did for Ahold," Standard & Poor's took no chances and reduced the company's credit rating to B++, otherwise known as "junk." Company stock plummeted by two thirds of its value Monday to 3.59 euros. At its peak, Ahold stock traded at 38.55 euros in April 1999.

Ahold's two top executives, CEO Cees van der Hoeven and CFO Michiel Meurs, were let go by the company, with Ahold chairman Henny de Ruiter trying to hold on to the reins while replacements for the other executives are sought.

Ahold's U.S. business consists primarily of a distribution service that delivers food to restaurants, schools, and prisons. Ahold also owns the U.S. Stop & Shop chain and Giant supermarkets.

The accounting irregularities stem from local managers booking higher promotional allowances, provided by suppliers to promote their goods, than they actually received in payment. Besides the company CEO and CFO, several U.S. senior executives have been suspended pending further investigation.

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.