A Computer Sciences Corp. analysis of the impact of FIN 48 led to the discovery of accounting errors dating back 10 years, the company said Tuesday.
FIN 48, which passed over a year ago and became effective for fiscal years beginning after December 15, 2006, requires companies to report the reserves set aside for “uncertain” tax positions — that is, those that might be challenged by the IRS. The news of CSC’s discovery, however, coincides with reports that Congress is also taking an active interest in FIN 48 disclosures.
CSC explained that the errors it found relate to how it accounted for income taxes and for the effect of foreign currency exchange rate movements on certain intracompany accounts. The company warned that it will take a charge of $200 million to correct the mistakes, although it also stressed that it has not completed its assessment of the errors.
The company said it will file an amended annual report for the March 2007 fiscal year as soon as its assessment is complete, and shortly after that will file quarterly report for the period ended June 29, 2007.
Last month, CSC warned it would not be able to file its June quarterly results on time due to an accounting review. It added at the time that company officials had yet to determine how FIN 48 would impact CSC’s financial statements and did not know when they would file the report for the quarter ending June 29.
In May, the company said it discovered “significant errors” in its accounting for tax liabilities in fiscal years 2000 through 2006. Correcting the errors, as well as less significant slip-ups, will result in a total charge of $300 million to $400 million through March 31, 2006, it added.
The amount did not include the $60 million or so in after-tax charges the company took through the same period as a result of its previously disclosed internal probe of stock option grants dating back to 1996.