Pre-Paid Legal Services Inc. said the Securities and Exchange Commission’s chief accountant this week rejected an appeal by the company of an earlier SEC decision that the company’s accounting methods don’t conform with generally accepted accounting principles, reports the Wall Street Journal.
The SEC in May told the Ada, Okla., multilevel-marketing company that sells “memberships” to cover customers’ legal expenses that it wasn’t properly accounting for commission payments to many of its salespeople, the newspaper said.
The SEC instructed Pre-Paid, whose auditor is Deloitte & Touche, that it should restate its previously issued financial statements, a move that would substantially lower the company’s previously reported earnings and shareholder equity.
Pre-Paid is scheduled to report its second-quarter financial results Tuesday.
The company Wednesday said it “is determining what further actions, if any, to pursue that would be in the best interest of its shareholders regarding the accounting issue.”