Auditing

Molex Execs Stay on, Deloitte Leaves

The Big Four firm informed the company that a problem regarding inventory accounting information should have been disclosed to the auditor; Molex d...
Stephen TaubNovember 16, 2004

Molex Inc. announced that Deloitte & Touche LLP has resigned as its auditor because the company would not dismiss its chief executive officer and chief financial officer.

Last week, Molex — a manufacturer of electronic and electrical components based in Lisle, Illinois — announced that it would delay the filing of its September quarterly results due to accounting issues. The company also named executive vice president and former finance chief Robert Mahoney as acting CFO. Molex’s then-CFO, Diane Bullock, was named vice president and treasurer, apparently at the urging of Deloitte.

In a statement on Monday, Molex said that it was advised late last week by Deloitte that the auditor was prepared to complete its review of the company’s quarterly results, but only if Bullock and chief executive officer Joe King no longer served as officers and if certain disclosures were agreed upon. After Molex’s audit committee and board of directors each rejected that request, Deloitte resigned on Saturday.

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“We are extremely disappointed with the timing of Deloitte’s resignation and strongly disagree with their approach and the condition that we remove as officers valued members of our senior management team,” said Molex co-chairman Fred Krehbiel, in a statement. The company’s announcement added that the resignation was unrelated to accounting matters.

Molex earlier announced that it had identified the omission of certain inventory accounting information; the company took a related charge of $8 million, which it said would not require a restatement. According to the company, Deloitte informed the audit committee that the omission should have been disclosed in an August 20 representation letter from King and Bullock; Molex disagreed.

Molex filed its September quarterly report on Monday; the company stated that it will file an amended report after the results are reviewed by new independent auditors. Until then, added the company, Molex is not deemed by the Securities and Exchange Commission to be current in its filings or by Nasdaq to be in compliance with its continued listing requirements.