The Securities and Exchange Commission has launched an informal inquiry of The Shaw Group Inc., according to the company.
Although the commission hasn’t reported the reason for the inquiry or its scope, an SEC request for information from the company seems mainly to concern the purchase method of accounting for acquisitions contained in its 2003 annual report, according to Shaw Group.
The provider of engineering, environmental, and construction services said that the SEC has not issued a formal order and that the SEC’s notice states that the inquiry shouldn’t be construed as suggesting improper or unlawful conduct. The company added that it has voluntarily agreed to cooperate fully with the inquiry.
For all acquisitions launched after June 30, 2001, Shaw Group has been using the purchase method of accounting, later testing the acquired assets for impairment, according to the company 10-K filed for the August 2003 fiscal year. “We are confident that our accounting practices, including the application of the purchase method of accounting, are in accordance with generally accepted accounting principles,” said CFO Robert Belk. “While this is only an informal inquiry, we feel it is important to advise our shareholders and others because of our commitment to the principles of full disclosure and openness.”
The company doesn’t know which acquisitions or time periods the SEC is examining, Shaw Group spokesman Chris Sammons told Reuters.