Ace Hardware Co.'s financial house requires major repair work.
The Chicago Tribune today reports that Ace is looking at a $154 million accounting shortfall. The problem can be traced back over the past five years, according to Ace management, which says the screw-up occurred before it took over control of the place.
As a result, Ace is putting on indefinite hold a controversial plan to change Ace from a cooperative to a traditional corporation.
Well, that's one good thing to come out of this mess.
Ace management said the shortfall was discovered while it was preparing documents for the Securities and Exchange Commission outlining a proposed switch to the new corporate model.
Look for a significant restatement of Ace's numbers. Because of the accounting woes, the independently-owned hardware store dealers--who get paid dividends from Ace-- will probably lose all or some of their 2007 pay-out.
Ace joins a parade of major companies, including computer-maker Dell, Krispy Kreme, Kroger, that have had to clean up their books.
Doesn't anyone do an audit in real time anymore?
1 comment:
Odd that accounting errors appeared in 2002 which was the last Ace Annual Report Filed with the SEC before they quietly de-listed due to Sarbines Oxley legislation requiring a CEO Truthfulness Affidavit which contains provisions for jail time for a CEO lying on his financials.
Will the SEC now become involved ?
Since Ace Senior Management are on bonus incentives and the cooked books will result in restating financial results in subsequent years, will they be paying back some of their bonuses ?
Post a Comment