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Employees retrace the hours they worked on each project for the past two years; CEO (and interim CFO) Harry You describes a sort of ''perpetual catch-up.''
Stephen Taub, CFO.com | US
October 24, 2005
Blame BearingPoint's accounting troubles on a new finance package, says chief executive officer Harry You.
In an interview with The Washington Post, the former chief financial officer of Oracle Corp. and Accenture asserted that his firm's woes are the result of employees entering wrong data because they were poorly trained on the company's new financial system.
"It's not anything sinister or malicious," You insisted, according to the Post. "The problem is if you just make some slip-ups and you have to recheck everything, you kind of get stuck behind the eight ball because it just takes a long time to replicate whether you did things correctly."
"Our people weren't quite ready or trained as the new system came on board, and there were some entries that did not get done right," You added. "And then once those things are done wrong, you get in this sort of perpetual catch-up where your books and records are off and you are trying to figure out the source of the problem. But it is nothing that is fundamentally wrong with the system."
"Perpetual catch-up," You elaborated, has meant that for the past few months, some 400 temporary accountants have worked with company employees to manually re-create the financial data for BearingPoint's 6,470 North American contracts from the last couple of years. This effort required billing and expense records to be verified with consultants and data to be reentered, one transaction at a time, according to the newspaper.
The company's 17,000 employees reportedly were required to retrace the hours they worked on each project and verify their billing information. This drove away unhappy employees, the Post observed: In the first nine months of the year, about one-fourth of BearingPoint's workers left the company.
The McLean, Virginia-based firm, formerly KPMG Consulting, disclosed an informal SEC investigation in April; it was elevated last month to a formal order of investigation. In May, Joseph Corbett resigned as chief financial officer just four months after taking the job. You stepped in as interim CFO while retaining his CEO duties.
Investors and regulators are still waiting for the company to file its financials for the 2004 calendar year and its quarterly reports for 2005. You told the Post that a draft of the company's 2004 financials uncovered no "real surprises." The draft was recently sent to PricewaterhouseCoopers for review, added the paper.
"When there is a delay, people always worry about fraud first. . . .People tend to think there is an elephant in the closet," You told the paper. In this case, he added, "it is fortunately pretty mundane. It is clerical."
William R. Loomis, an analyst at Legg Mason Wood Walker Inc., told the Post that You's explanation of the source of the accounting problems makes sense. He added, however, that if the financial system the company created "wasn't user intuitive, and you have to spend a lot of money to train people, then the system probably wasn't installed right."