Financial Accounting Blog

Tuesday, June 08, 2004

Accounting Fraud. reports that although Symbol has settled probes for $138 million, seven former executives have been indicted for their roles in the accounting scandal.
"This is a textbook example of a company cooking the books," U.S. Postal Service Inspector William Kezer reportedly stated at a press conference in Brooklyn. "What's significant about this case is the number of cooks in the kitchen." Symbol committed fraud in order to meet analyst projections for 32 straight quarters, inflating revenue by $230 million between 1998 and 2002, according to Bloomberg, citing U.S. Attorney Roslynn Mauskopf.

The SEC singled out a number of fraudulent schemes to align Symbol's reported financial results with market expectations. They include a process through which baseless accounting entries were made to conform the unadjusted quarterly results to management's projections; the fabrication and misuse of restructuring and other non-recurring charges to artificially reduce operating expenses; channel stuffing and other revenue recognition schemes; and the manipulation of inventory levels and accounts receivable data to conceal the adverse side effects of the revenue recognition schemes.