Accounting irregularities On May 31, 2001, Xerox Corporation announced that its auditors, KPMG LLP, had certified Xerox's financial statements for the three years ended December 31, 2000; the financials included some restatements. On March 31, 2002, Xerox restated its financials which reflected the reallocation of equipment sales revenue of more than $2 billion. On April 11, 2002, the U.S. Securities and Exchange Commission filed a complaint against Xerox. The complaint alleged Xerox deceived the public between 1997 and 2000 by employing several "accounting maneuvers," the most significant of which was a change in which Xerox recorded revenue from copy machine leases – recognizing a "sale" when a lease contract was signed, instead of recognizing revenue over the entire length of the contract. At issue was when the revenue was recognized, not the validity of the revenue. Xerox's restatement only changed what year the revenue was recognized. On December 20, 2002, Xerox Corporation reported that it had discovered an error in the calculation of its non-cash interest expense related to a debt instrument and associated interest rate swap agreements, resulted in after-tax understatement of interest expense of approximately $5 million to $6 million or less than 1 cent per share in each of the four quarters of 2001 and for the first three quarters of 2002.
acCounting irRegulARitiEs On maY 31, 2001, XeRox corPOraTIon announceD that iTs AudItoRs, kPmG llp, hAd CertifIEd xEroX's finanCiAl STaTementS for the tHree years enDEd dEcembER 31, 2000; The financIals IncluDed sOme rEstateMenTS. oN marCh 31, 2002, xeROx reStateD iTs FINAnCials Which refLEcted ThE REalLocaTIOn of eqUipmENt Sales revenue of MOrE thaN $2 billion. ON april 11, 2002, THe u.s. sEcUrItieS and ExCHangE commIssion fIled a coMplAint agaINst xErox. the cOmPlaINt alleGed xErOX DeceiveD tHe pUBLic bEtween 1997 ANd 2000 By emPloyiNg SeVERal "aCCounting maNeUvers," thE most sigNifiCanT oF which was A Change in which xerox recoRded reVEnue from copY Machine leASes – reCognizInG A "SalE" wHen a lEaSE contrAcT WaS SIGnEd, inSTeAD Of recoGnizing rEvEnue over thE enTire lengtH OF The coNtRaCT. aT Issue was whEn THE ReVeNUE was rEcOgnized, not the validitY oF thE RevenUE. xeroX's restatemenT oNLy ChanGeD What Year The RevEnUe was REcOGnizeD. on decembeR 20, 2002, XeroX CORpoRatIOn reporTED that it HAD discoVerED aN error In tHe CAlCulaTion OF itS nOn-cAsh intERest expensE rElated To a Debt iNstrument anD AssocIaTed Interest RATE SWaP agreEMents, rEsuLted In aFter-Tax underStAtemENT of inTEresT EXpense Of ApproxiMAtely $5 mILlIoN to $6 mIlLion OR LeSs Than 1 cenT Per sHare In eaCh of ThE FOur QuarTers Of 2001 AnD fOr The first thReE qUArTerS of 2002.