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IBM inaccurate accounting investigation moves up a gear

The US Securities and Exchange Commission (SEC) is formally investigating possible inaccurate accounts posted by IBM for its first quarter last year.

The admission by IBM and confirmation by the SEC comes after financial analysts complained last year about the way the firm had accounted for expenses related to employee stock options.

The SEC recently ordered US companies to treat stock option costs as an expense against profits, and the SEC investigation will focus on the way IBM treated this area of its accounts.

Last year, it was revealed that the SEC was informally investigating the matter, but the step up to a formal investigation means that the SEC can now order the disclosure of documents and e-mails relating to the matter.

IBM said it was co-operating with the SEC enquiry. The SEC for its part said its investigation didn’t necessarily mean IBM had acted illegally.

News of the formal investigation pushed IBM’s shares down by around 1% on the New York Stock Exchange yesterday.

IBM posts its year-end results next Tuesday 17 January.


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