Accounting & Tax

SEC Launches Formal Probe of CSK Auto

The investigation of the auto parts maker deepens in the wake of far-reaching restatements and the departure of several finance department employees.
Stephen TaubDecember 27, 2006

CSK Auto said the Securities and Exchange Commission has informed the company that the regulator’s probe of CSK’s accounting practices is now a formal investigation.

The auto parts maker earlier announced it will restate its financial statements for 2003 and 2004, selected consolidated financial data for each of the four fiscal years 2001 through 2004 and interim financial information for each of its quarters in fiscal year 2004 and for the first three quarters of fiscal 2005.

The company also previously estimated that it overstated on its October 31, 2005 balance sheet about $70 million in inventory and $12 million in vendor allowances. It also estimated it overstated store surplus fixtures and supplies by between $3 million and $7 million.

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The company previously obtained an extension from the New York Stock Exchange until February 28, 2007 to file its 2005 annual report for its fiscal year ending January 29, 2006.

In September, the company said that president and chief operating officer Martin Fraser and chief administrative officer and former CFO Don Watson, as well as several other individuals in its finance organization, were no longer employed by the company.

In addition, the company said it intended to implement remedial measures to include enhanced accounting policies, internal controls and employee training.