Accounting & Tax

SEC, US Attorney Probing Dell

Computer maker delays 10-K filing and suspends stock buyback program.
Stephen TaubSeptember 11, 2006

Dell Inc. announced that the Securities and Exchange Commission and the United States Attorney for the Southern District of New York have launched an investigation into possible misstatements made in prior financial reports.

As a result, the embattled computer maker said it will delay the filing of its quarterly report for the second fiscal quarter ended August 4. Dell said the investigations have indicated the possibility of misstatements related to accruals, reserves, and other balance sheet items that may affect the company’s previously reported financial results.

Dell added that officials are working with the audit committee and the company’s independent auditors to determine whether it needs to restate prior results. The company plans to file the second-quarter report “as soon as possible.”

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“We have not yet reached any conclusion on materiality as to these issues,” said Don Carty, chairman of the audit committee reviewing the matter, in a statement. “We are continuing to investigate the matter fully.” Dell said the U.S. Attorney has subpoenaed documents related to the company’s financial reporting dating back to 2002.

“We are fully cooperating with the investigations and working to resolve any and all issues raised in connection with those investigations as quickly as possible, and we will take any appropriate remedial or corrective actions to address any problems,” Chairman Michael Dell said in a statement.

As a result of these developments, the company said it has suspended its ongoing share repurchase program until further notice. It also postponed a meeting with analysts, scheduled for September 13.