Dell says internal audit is nearly complete

Dell is in the final phases of an internal audit of its finances, the company said Thursday as it told the US Securities and Exchange Commission it will delay filing an audited earnings report for the fourth consecutive quarter.

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Dell is in the final phases of an internal audit of its finances, the company said Thursday as it told the US Securities and Exchange Commission it will delay filing an audited earnings report for the fourth consecutive quarter.

The company began the audit in an effort to comply with accounting investigations by the SEC and the US Attorney for the Southern District of New York.

Although the investigations have not yet led to a conclusion, Dell has already felt the impact on its bottom line - the company spent $46m on the investigation during the latest quarter alone. Dell is also staving off a threat by the Nasdaq stock exchange to delist its stock as punishment for failing to file official quarterly reports, called Forms 10-Qs, for the second, third and fourth quarters of fiscal 2007, and now the first quarter of fiscal 2008.

At the same time, Dell has been struggling in the marketplace. On May 31, the company announced a plan to lay off 10% of its 88,100 workers, in a continuing search for richer profits. The company earned $759m for the first quarter compared to $762m in the same quarter last year.

However, those numbers are subject to change if Dell management decides to restate its earnings, the company warned in the SEC filing. The company's audit committee stated in March that it had found evidence of misconduct and accounting errors, and now says it is reviewing each of those errors and proposing corrections. The committee will then decide whether to restate earnings.

Dell management will also determine whether there is "a material weakness in the company's internal controls over financial reporting" and whether its "disclosure controls and procedures are not effective," the filing said.

A company spokeswoman declined to give further details on the audit committee's progress, saying that the latest SEC report is just a formal confirmation of Dell's warning in May that its first quarter results were only preliminary.

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