McLean, Virginia-based consultancy BearingPoint (NYSE:BE) plunged 7% yesterday on reports of accounting problems relating to its financial controls, including contract review for revenue recognition, poor documentation and insufficient training for people in key accounting positions.
We've grown somewhat blithe about the ever-increasing number of companies that have to restate earnings or otherwise correct their accounting treatment, but this is ridiculous. BearingPoint's former name is KPMG Consulting, and it was until 2001 a component of KPMG -- one of the world's largest accounting firms.
One would think that with such a pedigree, BearingPoint would have ironclad fiscal controls built in, but apparently not.
What a total embarrassment, but not much of a surprise. BearingPoint is already suffering from spiraling compensation costs as a component of net income (I thought this was an IT consulting firm?). It also recently saw Moody's (NYSE:MCO) cut its ratings outlook to "negative," and has managed to attract the dreaded "sell" rating from analysts.
Not a great showing for a company that purports to know something about helping others run more efficiently.
