IBM Accounting Practices Again Being Scrutinized by SEC
Computer giant IBM disclosed in a press release late Monday that the SEC has launched an investigation into its accounting practices.
"The SEC is seeking information relating to revenue recognition in 2000 and 2001 primarily concerning certain types of customer transactions. IBM believes that the investigation arises from a separate investigation by the SEC of a customer of IBM's Retail Store Solutions unit. This unit markets and sells point-of-sale products."
Last year, the SEC investigated accounting practices at IBM which sent ripples across Wall Street. The investigation was concluded without the SEC taking any action. But that was before the continued scandals at WorldCom last summer were unveiled.
In an interview with SmartMoney.com, Horace Nash, a partner at law firm Fenwick & West indicated that its too early to tell what this investigation could reveal. "We can't tell at this point whether it's something that's going to be bad for IBM, or whether it's going to be a nonevent," said Mr. Nash. "It's entirely possible IBM is just being a good corporate citizen by telling the world earlier than it might have a few years ago that there is fact-finding going on." On the other hand, Mr. Nash said the outcome could cause IBM to restate financials.