Accounting & Tax

SEC Eyes Diebold Revenue Recognition

Two areas of interest seem to involve the company's voting-machine operations, although the probe covers all Diebold business.
Stephen TaubMay 11, 2006

Editor’s Note: Exactly one year to the day after the SEC launched the informal inquiry described below, the commission sent a subpoena to Diebold seeking more information, an indication that the inquiry has become a formal investigation. Read the 2007 story here.

Voting-machine maker Diebold disclosed in a regulatory filing that the Securities and Exchange Commission has launched an informal inquiry into the company’s revenue-recognition practices.

The company, which also manufactures security equipment and automated teller machines, also stated that in a letter, the SEC indicated that the inquiry does not suggest that Diebold violated federal securities laws. The company added that it is cooperating with the inquiry.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Company spokesman Mike Jacobsen told the Associated Press that the inquiry apparently involves two occasions on which the company restated revenue. Both situations seem to involve the company’s voting-machine operations, although the probe covers all Diebold business.

Jacobsen elaborated that Diebold shipped voting machines in Ohio in the second quarter of 2005 but then revised its reports to record the revenue in the third quarter. Diebold made the change, he reportedly added, because memory cards for the voting devices were not sent until July.

He told the wire service that the other change involved how the company reported revenue from service contracts for electronic-voting systems. In March, the company disclosed that $7 million in fourth-quarter 2005 election systems revenue and $4.2 million in net income would need to be recognized in future periods.