Vari-L Announces Resignation Of Its Independent Accounting Firm
Dow Jones Online News, Friday, July 07, 2000 at 08:38
DENVER -(Dow Jones)- Vari-L Co. said Haugen Springer & Co. has resigned as its auditors and independent accountants following the company's decision to replace the accounting firm in an internal investigation of its prior financial statements.
Vari-L (VARL), a Denver-based maker of wireless-communications gear, said the board's audit committee hired KPMG LLP because it didn't believe Haugen Springer would be able to effectively evaluate the prior financial statements it had audited for the company.
Haugen Springer, in a letter dated July 5, attributed the resignation to the replacement. The accounting firm also cast doubt on the accuracy of Vari-L's financial statements for the years ended Dec. 31, 1997 to 1999, since the firm hadn't completed its investigation of items for those periods and due to the likelihood of a prolonged investigation.
In its resignation letter, Haugen Springer said it had encountered information indicating that one or more illegal acts may have occurred in relation to Securities and Exchange Commission Act.
Items under investigation include the company's recognition of revenue, the capitalization of certain expenses and the depreciation and amortization of various policies.
In mid-May, Vari-L turned over information to SEC staff after the agency made inquiries regarding the company's internal accounting procedures, including its policies and practices for the capitalization of labor expenses and their documentation.
During that month, the company also announced that it had overstated 1997 revenue by $1.3 million and net income by $159,800. In its restatement, net income was $1.9 million, or 41 cents a diluted share, on revenue of $16.1 million.
A month after the restatement, shareholders of Vari-L filed a lawsuit in a Denver federal court, alleging the company issued false and misleading financial statements for 1997.
The audit committee hasn't yet hired a new independent accounting firm to audit its financial statements for the year ending Dec. 31, 2000. However, Vari-L still plans to post financial results for the second quarter when it files its earnings report in mid-August.
At that time, Vari-L said the audit committee plans to complete the investigation and post adjustments to the company's prior financial statements.
The audit committee expects to make certain adjustments in at least some of the areas cited by Haugen Springer in its resignation letter. However, Vari-L said the committee won't have estimates on the amount of total adjustments or their effect on the company's financial statements until the committee completes its investigation. |
