Media measurement firm Comscore will restate financial results for the past three years after its audit committee uncovered revenue recognition errors related to nonmonetary transactions.
The Wall Street Journal first called attention to comScore’s reporting of nonmonetary revenue last August. In the midst of the internal investigation, senior management was overhauled, with CFO Melvin Wesley stepping down as CFO last month.
On Thursday, comScore announced in a regulatory filing that based on the audit committee’s findings, it could not “support the prior accounting for the nonmonetary transactions recorded by the company during the years ended December 31, 2013, 2014 and 2015.”
The transactions involved exchanging data with other companies. According to the filing, revenue and expenses associated with all such transactions during the three-year period “should be reversed and accounted for at historical cost rather than at fair value.”
Since there is “no historical cost basis associated with the assets that the company exchanged … there should be no revenue recognized or expenses incurred for those transactions,” comScore explained.
The company said its restated 2015 revenue was $339.9 million — $29 million less than the figure it had previously reported. The nonmonetary transactions did not have a major effect on profits because comScore reported expenses related to them.
As the WSJ reports, “Revenue has been the most important metric for analysts and investors in comScore, which hasn’t reported an annual profit in recent years.” In addition, nonmonetary revenue helped boost comScore’s share price last year, “allowing its top management to reap millions in performance-based stock grants.”
Executives who benefited, according to the Journal, included Wesley and former CEO Serge Matta, who said earlier this month he would resign from the company entirely effective Oct. 10.
New CEO Gian Fulgoni said Friday in a conference call with analysts that he is “very much committed to ensuring that we get the company back on the right track and I think we can do that.”
ComScore said the audit committee had recommended that it enhance “communications to support a robust control environment” and strengthen controls around its revenue recognition practices.