Auditing

Lancer Responds to KPMG Withdrawal

President of soda-fountain-equipment maker is '' surprised and obviously disappointed.''
Stephen TaubFebruary 6, 2004

Soda-fountain equipment company Lancer Corp. took the offensive in its dispute with KPMG LLP, which resigned on Tuesday as Lancer’s outside auditor.

Responding to KPMG’s charges that Lancer engaged in “illegal acts” while being investigated by U.S. government agencies into its dealings with Coca-Cola Co., the company defended a recent audit-committee investigation that found no evidence of intentional misconduct or accounting irregularities, according to the Wall Street Journal.

Christopher D. Hughes, Lancer’s president and chief operating officer, told the paper that he was “surprised and obviously disappointed” by KPMG’s conclusions. He defended the audit committee’s investigation as “exhaustive.”

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In a letter to Lancer, KPMG cited “likely illegal acts” that “will have a material effect on the financial statements.” The auditor added that it resigned because “Lancer has not taken timely and appropriate remedial actions with respect to the illegal acts.” KPMG’s letter, Lancer noted, did not specifically identify any of these acts.

KPMG added that it intends to withdraw its audit opinions for Lancer for the three years from 2000 through 2002.

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