Xerox is putting in place new accounting measures following the extensive review of its financial statements for the last three years by auditor KPMG (PrintWeek, 6 April).


The review followed an independent investigation by Xerox into accounting and ethical breaches at its Mexican unit last year. KPMG decided that a deeper investigation was required.
"We have undertaken measures to enhance our internal accounting and now all worldwide finance employees will now report to financial controller Greg Taylor," said a Xerox spokesman.


The company agreed that it had misapplied some accounting principles, but no "fictitious transactions had been discovered".


"The restatement of the accounts does not have an impact on the companys liquidity," said chairman and chief executive Paul Allaire.


The restatement applies to three main areas: the charges for the Mexican scandal, which Xerox has now spread over three years; contingency deals relating to the purchase of Rank Groups 20% of Xerox UKs operations; and misapplication of US accounting rules on generally accepted accounting principles (GAAP) for leases.


Xerox has now made period adjustments, which increased its net income for 2000 by 89m ($127m).


First-quarter net income for 2001 also improved by 35m, but the adjustment will not apply to subsequent quarters.


The company said that the adjustment to revenue for each of the three years (1998-2000) was "insignificant".


The delayed full 2000 annual report will now be filed in the next few days.


Story by Andy Scott