Calling all accountants…

November 23, 2005

Late yesterday, Systemax (SYX), whose stock has fallen sharply over the past two weeks, finally filed the amended K that it first talked about back in mid-May to correct its financials dating back to 2002. The company has been struggling with inventory issues and on p. 33 of the amended filing had this little note:

As a result of a review of the subsidiary’s inventory activities for the years ended December 31, 2003 and 2004, the Company determined that the errors requiring this restatement resulted from an error in the compilation of the subsidiary’s year-end inventory value and an inaccurate recording of period end cut-offs. These errors were undetected or unrecognized as a result of the following weaknesses and deficiencies in the subsidiary’s controls:
‘__ Deficiencies in the monthly closing process which affect the timeliness and accuracy of recording transactions, including the preparation of numerous manual journal entries and a control environment heavily reliant on manual review procedures and adjustments

‘__ Deficiencies related to subsidiary ledger postings and account reconciliation processes

‘__ Insufficient staffing of the accounting function at the subsidiary

‘__ Inadequate information technology general controls with respect to inventory

The filing then goes on to say that it has begun to fix these problems by hiring a “new person to fill a senior managerial position” and plans to increase the staff further. There was also a brief note that the company plans to do more frequent inventory counts “at least once per quarter”, which kind of sounds like the bare minimum.

So if you’re an accounting-type and you’re looking to get involved in a turnaround situation, this could be the job for you.

Happy T-Day….I won’t be posting tomorrow, though I’m sure there will be plenty of turkeys filed later today!

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