Symantec announced on Monday that it has completed its internal accounting audit, and while some issues have been uncovered, only one customer transaction has an impact on financial statements.
Symantec stock dropped from nearly $30 to just under $20 after the company announced the investigation on May 10. It recovered slightly a few days later after more details were made public, but again dove under $20 after the firm revealed plans to cut as much as 8% of its workforce, representing roughly 1,000 employees.
Shares went up approximately 4 percent after the firm announced the completion of the audit.
The investigation was launched after a former employee raised concerns about “the Company’s public disclosures including commentary on historical financial results, its reporting of certain Non-GAAP measures including those that could impact executive compensation programs, certain forward-looking statements, stock trading plans and retaliation.”
The investigation, conducted with the help of a forensic accounting firm and independent legal counsel, identified issues related to the review, approval and tracking of transition and transformation expenses. It also found “certain behavior inconsistent with the Company’s Code of Conduct and related policies.”
The audit uncovered a customer transaction for which $13 million was erroneously recognized as revenue in the fourth quarter of FY 2018. The company has determined that $12 million of that amount should be deferred and the financial results for the fourth quarter of FY 2018 and the first quarter of FY 2019 be revised.
Symantec says it’s taking steps to address issues uncovered by the investigation and its board of directors has adopted recommendations made by the audit committee. This includes appointing a separate chief accounting officer and a separate chief compliance officer, and clarifying and enhancing the code of conduct.
No employment actions have been recommended as a result of the investigation, the cybersecurity firm said.
The audit has prevented Symantec from filing its annual report for the previous fiscal year (Form 10-K) and the report for the first fiscal quarter that ended on June 29 (Form 10-Q) with the Securities and Exchange Commission (SEC). The company is working to complete the preparation of the forms and hopes to have the annual report ready within a month.
The SEC has launched its own investigation into the matter after being contacted by Symantec.
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