Embattled auto-parts maker Visteon Corp. announced that it will restate its financials for three years because it incorrectly recorded certain costs.
The revisions are the result of an independent review after the board’s audit committee earlier determined that certain expenses for freight, raw materials, and other supplier costs originating in
North America were recorded in periods after December 31, 2004, when they should have been recorded in prior periods.
The audit committee’s also determined that many of the accounting errors resulted principally from improper conduct by two former non-executive finance employees responsible for the accounting oversight of these matters. One of the former employees reported to a financial vice president and the other worked at a lower level, spokesman Jim Fisher told Bloomberg.
The conduct “did not involve financial or accounting fraud,” Fisher reportedly added. Specifically, according to a company statement, the errors resulted from the periodic setting of accruals for freight expenses at inadequate levels, as well as delays in the processing of freight payments and raw-material price increases without adequate consideration of applicable accounting standards.
According to the company, the restatements will increase Visteon’s after-tax net loss between $35 million and $40 million in 2004, between $20 million and $25 million in 2003, and between $10 million and $15 million in 2002. Visteon is also assessing its previously announced financial results for 2005.
Visteon added that although management has not completed its analysis of the impact of these revisions on its internal controls over financial reporting, the company expects that there are one or more material weaknesses as of last December 31, in addition to those previously reported.
In May, when Visteon announced that an internal review raised “allegations of potential improper conduct by a former senior finance employee responsible for the accounting oversight for North American purchasing activities,” Fisher told the Detroit News that the Securities and Exchange Commission was “aware of our situation” and that the company was “cooperating fully with the SEC.”
