AES: Restating Due To Remediation

From AAO Weblog

Monday, AES Corporation issued a non-reliance 8-K covering its financials for 2006 to date and the years ended 2005, 2004, and 2003.

The company is still investigating, but it will restate for a variety of reasons. From the 8-K:

“The errors identified by the Company relate primarily to the following categories, which may change before the accounting review is finalized:
· Accounting for derivatives
· Capitalization
· Certain errors, including depreciation adjustments in the Company’s subsidiaries, C.A. La Electricidad de Caracas and AES Eletropaulo
· Share-based compensation, including stock option and restricted stock unit awards
· Income tax expense

Note the near-obligatory mantra: “All errors that have been presently identified result in non-cash adjustments.” That doesn’t mean they won’t matter: it’ll be interesting to see how widely the revised earnings vary from the original. And it’s interesting to note that the errors were uncovered during the remediation of control weaknesses noted in the 2005 audit. The “Controls” part of last year’s filing listed an amazing number of flaws, and you can see how it took over a year to work them all out. The late filing for 2006 and revocation of the prior years’ financial are just more evidence that internal controls matter… to companies of all sizes.

Many of these errors were identified as a result of the Company’s continuing remediation of previously identified material weaknesses. Other errors were discovered during the Company’s quarterly and year end accounting reviews. All errors that have been presently identified result in non-cash adjustments.”

http://www.accountingobserver.com/blog/