Accounting hole causes double resignation at Peregrine Systems
Peregrine Systems has announced the resignation of both its CEO and finance director after the discovery of $100 million accounting hole. On Wall Street, the shares reacted by plunging 60%.
Peregrine Systems, the infrastructure management solutions company, has announced the resignation of both its CEO and finance director after the discovery of $100 million accounting hole. On Wall Street, the shares reacted by plunging 60%.
The accounting gap emerged after KPMG replaced Arthur Anderson as auditor of Peregrine’s accounts. Similarly problems caused the collapse of the Enron power group whose books were also audited by Anderson.
In a company statement, Peregrine says “the scope and magnitude of these matters have not been determined. Based on the preliminary information reviewed to date, certain transactions involving revenue recognition irregularities, totalling as much as $100 million, have been called into question and may have been recorded during periods in fiscal 2001 and 2002. These transactions were recorded initially as revenue from the company’s indirect channels and may have been written off in later quarters.”
Steve Gardner, the chairman and CEO of Peregrine also announced his resignation and Matt Gless, CFO and executive vice president of finance, followed him out of the door. Fred Gerson, currently CFO of the San Diego Padres baseball team, has been named as acting CFO, while Charles La Bella, a former U.S. Attorney for the Southern District of California, becomes executive vice president and senior counsel.