Lubrizol Corp. has completed a restatement of financials for 2004 through 2006 to correct accounting errors for five post-employment benefit plans in three non-U.S. countries.
The errors resulted in a $66 million understatement of benefit-plan liabilities for 2005 and 2006. The restatement decreased income from continuing operations and net income for 2006 by $2 million, or 1.1 percent and 1.9 percent, respectively; for 2005 by $2.1 million; and for 2004 by $1.7 million.
The engine oil maker noted that the revisions had no effect on its previously reported revenues or net cash flows. There was also relatively little effect on shareholders’ equity, which decreased by only 1.4 percent in for 2006.
Lubrizol explained that the errors were made for a wholly owned subsidiary and two consolidated joint ventures.
Four of the post-employment employee benefit plans at issue had been accounted for inappropriately on a cash basis rather than an accrual basis as stipulated under U.S. generally accepted accounting principles. The fifth plan used the accrual method as allowed for that type of plan under GAAP, but the calculation of liabilities was not done in accordance with GAAP.
The company also said in a regulatory filing that it concluded there was a material weakness in internal control over financial reporting for deficiencies at some international locations due to insufficient knowledge of accounting for post-employment benefit plans.