IBM's accounting practices under investigation

IBM has said the US Securities and Exchange Commission (SEC) has begun an investigation into how the company accounted for some…

IBM has said the US Securities and Exchange Commission (SEC) has begun an investigation into how the company accounted for some revenue in 2000 and 2001.

IBM said it "believes the investigation arose from a separate SEC investigation of a customer of IBM's Retail Store Solutions unit," which sells electronic cash registers and other point-of-sale products.

IBM shares fell almost 3 per cent after the announcement, which raised the spectre of the accounting scandals of Enron, WorldCom and others that have undermined investor confidence.

"The SEC is seeking information relating to revenue recognition in 2000 and 2001 primarily concerning certain customer transactions," spokesman Mr Bill Hughes said.

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The SEC advised IBM that it has not reached any conclusions related to this matter, IBM said. The company said it is cooperating with the federal agency.

In the past, investors have criticised the company for its lack of disclosure. Last year, IBM addressed some of those issues by increasing the amount of information it provided.

In April 2002, the SEC revealed it had opened and closed a preliminary inquiry into IBM but did not specify the focus of the investigation.