Xerox has taken drastic accounting steps by dismissing its long-time auditor, KPMG, while its chief financial officer has quit.

"After a number of internal and independent accounting reviews we decided to start over with a clean slate of auditors and have called on PricewaterhouseCoopers," said a Xerox spokeswoman.

She refused to give more details on the announcement. But KPMG has been highly critical of Xeroxs accounting for over a year in areas such as "internal control systems" and finance reporting.

In April Xerox delayed issuing its annual report after KPMG decided to probe its business in Mexico and accounting practices (PrintWeek, 6 April). The Mexican troubles led to an investigation by the Securities and Exchange Commission.

However, a Xerox spokeswoman said the firm had taken on several KPMG recommendations on customers, billing and tighter controls for financial staff.

She denied the departure of chief financial officer and vice chairman Barry Romeril had any link to the ruction over KPMG even though the accountant was said to be keen on his exit.

Romeril had taken early retirement but would do consultancy work for Xerox, she said.

A KPMG spokesman said the matter was confidential but added: "We are sorry to see a 30-year relationship end, and the decision was the clients."

* Xerox has signed a four-year 2m deal with office supplies firm Staples to expand its copy centre business from retail customers to include the business community. The firm will become one of the largest UK users of the Xerox DocuColor 12, with 64 in its 78 UK stores.

Story by Jez Abbott