The US Securities and Exchange Commission's enforcement division is conducting a formal investigation into possible fraudulent accounting practices at Lucent Technologies, the Wall Street Journalreported today, citing people with knowledge of the investigation.
The probe focuses on whether Lucent improperly booked $679 million in revenue during its 2000 fiscal year, which ended September 30th, according to people familiar with the investigation cited by the Wall Street Journalin its online edition.
According to one person with knowledge of related SEC documents, commission staff are investigating Lucent's procedures for booking sales, in particular its use of "non-recurring credits," or one-time discounts, given to customers, as well as Lucent's accounting treatment of software-licensing agreements, the Journaladded.
The SEC is also looking at how Lucent recognised revenue on sales to its distributors, who may not have sold the products, a practice known as "stuffing the channels."
Also under examination is the company's use of revenue targets for fiscal 2000, the report said.
"We are voluntarily and completely cooperating with the SEC," Lucent spokeswoman Ms Kathleen Fitzgerald was cited as saying.
Ms Fitzgerald said the company initiated contact with the SEC on the morning of November 21st, just before it first publicly revealed some of the problems. "Since then, Lucent has shared all of its findings on revenue restatements with the commission," she said.
In addition, Lucent shared the results of an external audit of fiscal year 2000 conducted by PricewaterhouseCoopers and Lucent's outside counsel, Cravath, Swaine & Moore, late last year. The company's lawyers have also made two in-person presentations at SEC headquarters in Washington, DC, the report said.
An SEC spokesman declined to confirm or deny the investigation, it added.
AFP