Xerox restatement 'defies economic reality' - KPMG


KPMG said Xerox Corp's restatement of revenues for the period 1997-2000 "defies economic reality" and said it stands by its audits of the company's accounts.

In a statement, KPMG, which audited Xerox until last October when the company switched to PriceWaterhouseCoopers, described the restatement as "an astonishing about-face on the part of Xerox's management and PricewaterhouseCoopers".

"We are not aware of any facts that would change our previous conclusions - or the conclusions previously held by PwC and Xerox until Xerox announced its settlement with the SEC in April 2002," the auditor said. "We continue to stand behind our audit work and our engagement teams."

KPMG said the financial statements which it reported on in May 2001, including Xerox's figures for 2000 and its restated financial statements for 1997-1999, were "fairly presented in accordance with generally accepted accounting principles (GAAP)".

"KPMG, Xerox and PricewaterhouseCoopers had it right the first time, when the company and three separate teams from PwC all agreed with us that Xerox's lease accounting methodology was GAAP compliant," said the statement.

The restated financial statements appear to give Xerox the benefit of recognising revenues in 2002 and beyond that have already been booked, said the auditor.

"We cannot believe such an opportunistic restatement can well serve the interests of the investing public or to help reestablish confidence in the capital markets," it said.

KPMG released the statement after news reports flagged the restatement which Xerox made early today. The firm had not yet seen the full details of the restatement.