Monday, June 13, 2005
Delphi Automotive seems to be establishing a tradition of finding a new accounting problem during its internal investigation and then firing a couple executives. In an 8-K filing (here), the company asserts that it plans to file its long-delayed financial reports by June 30, and its auditors have discovered problems in the reporting of sales of accounts receivable and factoring transactions. The company stated:
[T]he Audit Committee concluded that the Company did not accurately disclose to credit ratings agencies, analysts or the Board of Directors the amount of sales of accounts receivable or factoring arrangements from the date of its separation from General Motors until year-end 2004. The Company believes these sales were properly accounted for under U.S. GAAP and therefore these findings should not impact amounts set forth in the Company’s consolidated financial statements. Deloitte & Touche LLP is in the process of auditing the accounting for these factoring arrangements. There were, however, inaccuracies in previously disclosed non-GAAP measures of Delphi’s net liquidity. Following its review, the Audit Committee accepted the resignations of the Company’s current Treasurer, Pam Geller and John Blahnik, its former Vice President of Treasury, Mergers & Acquisitions.
Delphi has already fired CFO Alan Dawes, among others, and CEO J.T. Battenberg announced his retirement shortly before the accounting problems were disclosed -- for reasons entirely unrelated to the financial reporting problems, so Delphi stated. The SEC and DOJ are investigating, and once the internal investigation is complete look for developments on that front. The way the company is going through executive, be careful if you're near Delphi's headquarters in Troy, Michigan, you may be hired in its accounting office. (ph)