Saturday, September 17, 2005
Interpublic Group of Companies, Inc., the international advertising agency, disclosed that it will not be able to file its 10-K annual report, and that it will have to restate its financials due to internal control problems and other accounting issues. More ominously, the company stated that some of its (now former) employees engaged in misconduct resulting in significant accounting fraud. According to Interpublic's 8-K (here):
As a consequence of the expanded scope of our work on the restatement and our anti-fraud program, certain items came to our attention that required investigations into possible employee misconduct. These investigations, which relate primarily to agencies outside the United States, revealed accounting errors that were qualitatively material. These errors resulted from the misapplication and inadequate knowledge of GAAP as well as errors resulting from instances of falsified books and records, violations of laws, regulations and company policies, misappropriation of assets, and inappropriate customer charges and dealings with vendors. These investigations are nearing completion. The results of these investigations are being reviewed by the Audit Committee of the Board of Directors, with the advice of independent counsel and forensic accountants. As a result of these investigations, financial statement adjustments are being made and remediation plans have been, or are in the process of being, developed to address internal control and policy issues. In all cases, culpable employees have been terminated or are in the process of being terminated or are otherwise no longer with the Company.
Proper accounting, like image, is everything. (ph)