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SCO's Auditors Resign: Out With the Old, In With the New |
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Friday, June 03 2005 @ 05:24 PM EDT
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SCO's auditors, KPMG, have resigned, so SCO has a new firm, Tanner. They are "pleased", of course, to appoint new auditors and claim they never had any disagreements with the old ones. I suppose the old firm wishes to spend more time with their families. Just horsing around. They don't tell us why they resigned. Here's the press release. They filed an 8-K about it, with a letter from KPMG attached as an exhibit, and their 10-Q, which tells us that they will "likely assert counterclaims against Red Hat, should the stay be lifted. I'm sure Red Hat can barely sleep from fear. Maybe fear and loathing. Well. At least loathing. And here's a Sarbanes-Oxley Financial and Accounting Disclosure Information page.
The 10-Q also tells us this about SCO's "core" business: Our sales of UNIX products and services during the last several periods have been primarily to pre-existing UNIX customers and not newly acquired customers. . . .
Revenue from our UNIX business decreased by $898,000, or 9 percent, for the second quarter of fiscal year 2005 compared to the second quarter of fiscal year 2004 and decreased by $3,475,000, or 16 percent, for the first two quarters of fiscal year 2005 compared to the first two quarters of fiscal year 2004. The revenue from this business has been declining over the last several quarters primarily as a result of increased competition from alternative operating systems, particularly Linux. If revenue from our UNIX business continues to decline and we are unable to generate positive cash flow, our UNIX business will be adversely impacted.
In an effort to attain profitability in our UNIX business, we have decreased our operating costs and streamlined our operations. Operating costs for our UNIX business decreased from $12,201,000 for the second quarter of fiscal year 2004 to $7,449,000 for the second quarter of fiscal year 2005 and decreased from $23,286,000 for the first two quarters of fiscal year 2004 to $14,487,000 for the first two quarters of fiscal year 2005. These cost reductions have primarily been attributable to reduced headcount, continued operational efficiencies generated in our UNIX business, the elimination of certain write-offs and severance and exit costs, as well as from the consolidation of certain facilities.
In our UNIX business, we have reduced the number of full-time equivalent employees from 263 as of April 30, 2004, to 164 as of April 30, 2005. We have taken these headcount reductions and reduced other discretionary spending while still maintaining a worldwide presence. Based on our cost-cutting actions, we anticipate that our UNIX business will continue to generate income from operations and positive cash flow throughout fiscal year 2005. . . .
SCOsource Business. During the 2003 fiscal year, we became aware that our UNIX code and derivative works had been inappropriately included in the Linux operating system. We believe the inclusion of our UNIX code and derivative works in Linux has been a major contributor to the decline in our UNIX business because users of Linux generally do not pay for the operating system but pay only minimal fees, if any, for service and maintenance. The Linux operating system competes directly with our OpenServer and UnixWare products and has taken significant market share from these products.
In an effort to protect our UNIX intellectual property, we initiated our SCOsource business. The initiatives of this business include seeking to enter into license agreements with UNIX vendors and offering SCOsource IP licenses to Linux and other end users allowing them to continue to use our UNIX source code and derivative works found in Linux. We believe that our SCOsource licensing revenue opportunities have been adversely impacted by our outstanding dispute with Novell over our UNIX copyright ownership, which may have caused many potential customers to delay or forego licensing until an outcome in this legal matter has been reached. . . .
If our revenue from the sale of our UNIX products and services continues to decline, we will need to further reduce operating expenses to generate positive cash flow. We may not be able to further reduce operating expenses without damaging our ability to support our existing UNIX business. Additionally, we may not be able to achieve profitability through additional cost-cutting actions.
Our UNIX products and services revenue has declined over the last several years primarily as a result of increased competition from alternative operating systems, particularly Linux. In our quarterly results of operations, we recognize revenue from agreements for support and maintenance contracts and other long-term contracts that have been previously invoiced and are included in deferred revenue. Our future UNIX revenue may be adversely impacted and may continue to decline if we are unable to replenish these deferred revenue balances with long-term maintenance and support contracts or replace them with other sustainable revenue streams. If we are unable to generate positive cash flow and profitable operations, our operations will be adversely impacted.
All these antiLinux FUDsters need to coordinate better. SCO is telling the court that Linux is generally free and service costs are minimal, underpricing their proprietary code; meanwhile Microsoft's Get the Facts ha ha campaign claims that it costs more to switch to Linux than to stay with them. So, guys, take a meeting and work this problem out, will you? You can't expect Groklaw to answer diametrically opposing FUD, can you? Besides, it's making it hard to take you seriously.
Here's the press release, followed by pertinent text of SCO's 8K, followed by KPMG's letter, Exhibit 16-1:
*************************************
The SCO Group Appoints New Independent Registered Public Accounting Firm
Friday June 3, 4:17 pm ET
LINDON, Utah, June 3 /PRNewswire-FirstCall/ -- The SCO Group, Inc. (Nasdaq: SCOX - News), owner of the UNIX operating system and a leading provider of UNIX-based solutions, today announced that the Audit Committee of The SCO Group's Board of Directors approved and appointed Tanner LC ("Tanner") as its independent registered public accounting firm for the fiscal year ending October 31, 2005, effective June 2, 2005. KPMG LLP ("KPMG") was previously the independent registered public accounting firm for the Company. On May 27, 2005, KPMG notified the Company that they would resign upon completion of the Statement on Auditing Standards ("SAS") No. 100 review of the Company's condensed consolidated financial statements as of April 30, 2005 and for the related three and six month periods ended April 30, 2005. Effective June 2, 2005, KPMG completed their SAS 100 review and their resignation became effective.
Bert B. Young, Chief Financial Officer of The SCO Group said, "We are pleased to appoint Tanner as auditor for SCO. Tanner's size, expertise, resources, and local accessibility will serve SCO's shareholders well at this time in the company's evolution. We look forward to working with Tanner."
Young continued, "We have had no disagreements with KPMG and appreciate their professionalism in serving us in the past."
In connection with the audits of the two fiscal years ended October 31, 2004 and the subsequent interim periods through June 2, 2005, there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreements in connection with its reports.
The audit reports of KPMG on the Company's consolidated financial statements as of and for the years ended October 31, 2004 and October 31, 2003 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
About SCO
The SCO Group, Inc. (Nasdaq: SCOX - News) helps millions of customers to grow their businesses everyday. Headquartered in Lindon, Utah, SCO has a worldwide network of thousands of resellers and developers. SCO Global Services provides reliable localized support and services to partners and customers. For more information on SCO products and services, visit www.sco.com.
SCO, and the associated SCO logo, are trademarks or registered trademarks of The SCO Group, Inc. in the U.S. and other countries. UNIX is a registered trademark of The Open Group. All other brand or product names are or may be trademarks of, and are used to identify products or services of, their respective owners.
****************************************
[Excerpt from 8-K]
Item 4.01 Changes in Registrant's Certifying Accountant.
KPMG LLP ("KPMG") was previously the independent registered public accounting firm for The SCO Group, Inc. (the "Company"). On May 27, 2005, KPMG notified the Company that they would resign upon completion of the Statement on Auditing Standards ("SAS") No. 100 review of the Company's condensed consolidated financial statements as of April 30, 2005 and for the related three-month and six-month periods ended April 30, 2005. On June 2, 2005, KPMG completed their SAS 100 review and their resignation became effective. On June 2, 2005, Tanner LC ("Tanner") was engaged as the independent registered public accounting firm. The Audit Committee of the Company's Board of Directors recommended and approved the appointment of Tanner.
In connection with the audits of the two fiscal years ended October 31, 2004, and the subsequent interim periods through June 2, 2005, there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference in connection with their opinion to the subject matter of the disagreement.
There were no reportable events (as defined in Regulation S-K Item 304(a)(1)(v)) during the two most recent fiscal years of the Company ended October 31, 2004, or the subsequent interim periods through June 2, 2005, except that, KPMG reported in a letter to the Company's Audit Committee dated May 17, 2005 that during its audit of the Company's financial statements for the fiscal year ended October 31, 2004, it noted a material weakness in internal controls related to the accounting for capital stock and stock option transactions. The Audit Committee and the Company's management discussed the issue with KPMG and the Company has authorized KPMG to respond fully to the inquiries of Tanner concerning the issue.
The audit reports of KPMG on the Company's consolidated financial statements as of and for the years ended October 31, 2004 and October 31, 2003 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
A letter from KPMG LLP is attached as Exhibit 16.1 to this Form 8-K.
During the Company's two most recent fiscal years and the subsequent interim periods through June 2, 2005, the Company did not consult with Tanner regarding any of the matters set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
*****************************************
Exhibit 16-1
June 3, 2005
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously principal accountants for The SCO Group, Inc. and, under the date of February 18, 2005, except as to note 16, which is as of March 11, 2005, we reported on the consolidated financial statements of The SCO Group, Inc. as of and for the years ended October 31, 2004 and 2003. On May 27, 2005, we notified the SCO Group, Inc. that we would resign upon completion of the Statement of Auditing Standards (SAS) No. 100 review of The SCO Group, Inc.'s condensed consolidated financial statements as of April 30, 2005 and for the related three-month and six-month periods ended April 30, 2005. The SAS No. 100 review was completed June 2, 2005. We have read The SCO Group, Inc's statements included under Item 4.01 of its Form 8-K dated June 3, 2005, and we agree with such statements, except that we are not in a position to agree or disagree with The SCO Group, Inc's statements that: 1) Tanner LC was engaged as the independent registered public accounting firm and the Audit Committee recommended or approved their appointment and 2) whether or not The SCO Group, Inc. consulted with Tanner LC regarding any of the matters set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
Very truly yours,
/s/ KPMG LLP
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Authored by: Nick_UK on Friday, June 03 2005 @ 05:55 PM EDT |
'Tanners' normally work in abattoirs, beating a life into
a dead skin to make it sellable into a handbag or
whatever.
Here in the UK, a 'tanner' is worth 6d, or in new money, 2
1/2 New Pence.
Good news, I presume?
Nick ;-) [ Reply to This | # ]
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- SCO's Auditors Resign: Out With the Old, In With the New - Authored by: Anonymous on Friday, June 03 2005 @ 06:14 PM EDT
- SCO's Auditors Resign: Out With the Old, In With the New - Authored by: Anonymous on Friday, June 03 2005 @ 06:15 PM EDT
- SCO's Auditors Resign: Out With the Old, In With the New - Authored by: Steve Martin on Friday, June 03 2005 @ 08:45 PM EDT
- SCO's Auditors Resign: There's a clue for SCO stockholders - Authored by: Anonymous on Friday, June 03 2005 @ 09:40 PM EDT
- SCO's Auditors Resign: Out With the Old, In With the New - Authored by: Anonymous on Saturday, June 04 2005 @ 08:05 AM EDT
- When SCO is done with the tanners: - Authored by: Sunny Penguin on Sunday, June 05 2005 @ 12:50 AM EDT
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Authored by: IRJustman on Friday, June 03 2005 @ 05:56 PM EDT |
Post 'em if ya got 'em! [ Reply to This | # ]
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Authored by: IRJustman on Friday, June 03 2005 @ 05:58 PM EDT |
Be sure you make them clickable, and remember to post as HTML. [ Reply to This | # ]
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- OT linkage - Authored by: Anonymous on Friday, June 03 2005 @ 06:22 PM EDT
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Authored by: Anonymous on Friday, June 03 2005 @ 06:35 PM EDT |
"Creativity can solve almost any problem"
No joking. See this
for yourself. This is their motto at the top of their homepage:
http://www.bestcpa.com
[ Reply to This | # ]
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- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: Anonymous on Friday, June 03 2005 @ 06:40 PM EDT
- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: NvrPanic on Friday, June 03 2005 @ 06:46 PM EDT
- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: kaltekar on Friday, June 03 2005 @ 06:50 PM EDT
- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: scott_R on Friday, June 03 2005 @ 07:05 PM EDT
- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: SpaceLifeForm on Friday, June 03 2005 @ 07:51 PM EDT
- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: Anonymous on Friday, June 03 2005 @ 08:32 PM EDT
- two words: "Creative Accounting" - Authored by: Anonymous on Friday, June 03 2005 @ 08:56 PM EDT
- I'm in 2 minds about this (maybe 3) - Authored by: Anonymous on Friday, June 03 2005 @ 09:04 PM EDT
- It Gets Worse! - Authored by: Anonymous on Saturday, June 04 2005 @ 02:41 AM EDT
- It Gets Worse! - Authored by: Anonymous on Saturday, June 04 2005 @ 10:20 AM EDT
- New Accountants Motto: "Creativity can solve almost any problem" - Authored by: ENOTTY on Saturday, June 04 2005 @ 07:08 AM EDT
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Authored by: gnutechguy99 on Friday, June 03 2005 @ 06:41 PM EDT |
How much of this is a just a smokescreen for when SCO (may) get busted for
cooking the books?
KPMG comes in, blesses SCO's creative accounting for the last year or so, then
rides off into the sunset with their checks.
Just a thought from a non-accountant.
PS "I suppose the old firm wishes to spend more time with their
families."
PJ, you just kill me sometimes :)[ Reply to This | # ]
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Authored by: scott_R on Friday, June 03 2005 @ 06:43 PM EDT |
Regulation S-K Item 304
Guidance information for above link[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 06:45 PM EDT |
KPMG was clearly offered an honorable exit after it screwed up its auditing
duties in the past and got the chance to correct its negligence.
No fancy footwork needed.[ Reply to This | # ]
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- KPMG got sacked. Period. - Authored by: kaltekar on Friday, June 03 2005 @ 06:55 PM EDT
- KPMG got sacked. Period. LOL - Authored by: rjamestaylor on Friday, June 03 2005 @ 07:01 PM EDT
- KPMG got sacked. Period. - Authored by: dbc on Friday, June 03 2005 @ 07:16 PM EDT
- Do you understand what an auditor does ?. - Authored by: dmarker on Friday, June 03 2005 @ 07:26 PM EDT
- BIFF? Is that you? - Authored by: Anonymous on Friday, June 03 2005 @ 07:46 PM EDT
- Re: KPMG got sacked. Period. - Authored by: darkonc on Friday, June 03 2005 @ 07:49 PM EDT
- KPMG got sacked? I doubt it. - Authored by: LarryVance on Friday, June 03 2005 @ 08:21 PM EDT
- Folks, this is a troll. No need to give it credibility (n/t) - Authored by: Anonymous on Friday, June 03 2005 @ 08:22 PM EDT
- KPMG got sacked. Period. - Authored by: Anonymous on Friday, June 03 2005 @ 09:09 PM EDT
- KPMG quit. Period. - Authored by: rsteinmetz70112 on Friday, June 03 2005 @ 10:18 PM EDT
- KPMG got sacked. Period. - Authored by: meshuggeneh on Friday, June 03 2005 @ 10:41 PM EDT
- KPMG got sacked. Period. - No they didn't. - Authored by: PJ on Saturday, June 04 2005 @ 02:05 PM EDT
- Maybe KPMG can read a balance sheet - Authored by: Anonymous on Monday, June 06 2005 @ 11:51 AM EDT
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Authored by: Anonymous on Friday, June 03 2005 @ 06:51 PM EDT |
KPMG are probably learning the lesson that Anderson's didn't, and are trying to
distance themselves from a dodgy company.[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 07:04 PM EDT |
Hey, everybody!
I wonder if they quit being the accounting firm because, with the adjustments
SCO talks about in the meetings, assigning revenue and costs to different parts
of the ledger, they thought they would be held accountable in an investigation
by the feds. Maybe they jumped not because SCO is sinking, but because an
investigation is pending.
And I love the part about how they aren't bringing in new customers and if
things don't break their way, they'll go under. Yousa tink so, Jar Jar?
Plausible?
Dobre utka,
The Blue Sky Ranger[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 07:15 PM EDT |
Why doesn't SCO just team up with an accounting firm that will have the same
level of integrity they want?[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 07:28 PM EDT |
Something has definatly been up. I had a feeling there was something going on.
This wouldn't have come up suddenly on the 27th, there would have been
discussion going on before then. Now, what's next?
Tufty
[ Reply to This | # ]
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- Ahh, yes - Authored by: stend on Friday, June 03 2005 @ 07:54 PM EDT
- Ahh, yes - Authored by: scott_R on Friday, June 03 2005 @ 08:18 PM EDT
- Ahh, yes - Authored by: Anonymous on Friday, June 03 2005 @ 08:59 PM EDT
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Authored by: Anonymous on Friday, June 03 2005 @ 07:44 PM EDT |
... usually the headline that precedes the later "XXX Inc's directors were
today indighted on charges ranging from ..."?
Generally with a few headlines between the two along the lines of
"government officials have today called for greater controls on dodgy
business dealings, in light of concerns raised in the XXX Inc scandal
..."?
;-)
[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 07:53 PM EDT |
All these antiLinux FUDsters need to coordinate better. SCO is telling the
court that Linux is generally free and service costs are minimal, underpricing
their proprietary code; meanwhile Microsoft's Get the Facts ha ha campaign
claims that it costs more to switch to Linux than to stay with them. So, guys,
take a meeing and work this problem out, will you? You can't expect Groklaw to
answer diametrically opposing FUD, can you? Besides, it's making it hard to take
you seriously.
I hate to sound like I support SCO or MS, but I don't
see a contradiction between the two statements.
There's no contradiction
if you make a clear difference between "hard dollars", i.e. the money you pay
for license fees or outside consultants, and "soft dollars" which are internal
costs. SCO's statement only refers to "hard" dollars, while MS's "get the facts"
campaign talks of both the "hard" and the "soft" dollars. Apples and
oranges.
PS: I've helped dozens of companies convert from one operating
system to another for the last 25 years.
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Authored by: emmenjay on Friday, June 03 2005 @ 08:17 PM EDT |
While we can all speculate interesting and devious reasons why SCOX changed
accountants, it might be much simpler.
KPMG, as a big name, are probably quite expensive. Tanners, who seem to be much
smaller, may be significantly cheaper.
SCOX are, after all, trying to cut costs.
MJ.[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 08:25 PM EDT |
In the very recent Autozone discussion there was much talk about "Material
Misstatements" being a clear euphemism for "you're a damned
liar".
Surely (from an auditor) "We resign" has to be the definitive
euphemism for "you're a damned fool if you believe these accounts"!
But it should be a fun easter egg hunt figuring out exactly what finally caused
them to jump ship.
[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 08:30 PM EDT |
The old accountant joke --
"How much is 1+1?"
"How much do YOU want it to be?"[ Reply to This | # ]
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Authored by: The Mad Hatter r on Friday, June 03 2005 @ 08:47 PM EDT |
I've seen auditors leave before. This case is strange though.
There's only 8 days between KPMG "resigning" and Tanner signing on.
You don't sign up a new outside auditor that quickly. This sort of thing takes
time. I've seen it take 3-4 months. Now maybe the management at TSCOG is more
efficient than I think... Heck, if they managed this they are more efficient
than 99% of the companies I know.
Now what may have happened (and this is SPECULATION):
Say you have a customer who you don't intend to continue servicing. The reason
doesn't manner. One of your reps quietly (and unofficialy) indicates to the
customer that you'll work for a certain period of time, and that they should
make other arrangements.
So the customer makes other arrangements, and when you issue your letter they
aren't surprised, and in fact they are able to announce the hiring of a
replacement firm just over a week later.
End Speculation
As I've said before a lot of things in business don't move fast. Companies can't
afford to move fast. I've got 2 new customers in the last 3 months - I worked on
each for close to 5 years before they started to buy. Companies don't make major
purchase decisions without doing "due diligence" on the firm in
question. Hiring an accounting firm is a major decision.
Due diligence is a slow process. You don't make sudden moves. Sudden moves can
have a disasterous effect on your business. In effect your auditor is a
"Tier One" supplier. You can't make a sudden move in hiring them.
Unless you have it all arranged ahead of time...
---
Wayne
telnet hatter.twgs.org
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Authored by: arch_dude on Friday, June 03 2005 @ 09:53 PM EDT |
It is perfectly acceptable for a publically-held firm to use a competent local
firm to do the accounting, or to use in-house accountants.
Auditing is different. A legitimate publically-held company must re-assure its
stockholders that the books are legitimate. a savvy investor will not invest in
a company unless the investor trusts the auditor. A company pays premium rates
for an auditor with a national reputation ( a "big 8" firm) to
reassure the general stockholding public.
Replacing KPMG with Tanner means that SCOG no longer cares about the casual
investor. Even if Tanner is highly competent and completely above reproach, they
are not known to the average investor or fund manager, so such an investor must
invest extra research time before buying SCOX. This in turn implies that SCOG's
board is no longer trying to sell stock to normal investors.[ Reply to This | # ]
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Authored by: Anonymous on Friday, June 03 2005 @ 10:26 PM EDT |
Much as I don't like SCO, I have to admit this is a stretch to turn the KPMG
story in to something. This is most likely a reflection of the fact that SCO got
too small for KPMG to care about. The bigger Auditors these days are only
focussing on bigger (and therefore more profitable) companies. If you look
around you would find that most companies below $100 Million are being dumped by
the big audiotors. The small companies just aren't worth their time.
I like a conspiracy theory as much as the next guy, but this is a really big
stretch.
Gavin[ Reply to This | # ]
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Authored by: tangomike on Friday, June 03 2005 @ 10:54 PM EDT |
why the recent TSCOG financial statement was marked "Unaudited".
Tin foil hats on? Good! Apparently changing auditors when your quarterly
financial statement is due allows you to publish and file an unaudited
statement.
Cute, very cute.
If this is deliberate, then we may have just heard TSCOG sound its collision
and sinking signals.
---
Nothing screams 'poor workmanship' like wrinkles in the
duct tape.
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Authored by: Anonymous on Friday, June 03 2005 @ 11:37 PM EDT |
KPMG describes itself as a cooperative made up of member firms which are
independant legal entities. I don't know about anywhere else; they have a very
good reputation in my neck of the woods. I bet if you added up all the entities
that call themselves KPMG, the result would totally dwarf SCO.
When SCO was late filing its SEC stuff, the rumor was that the
accountants/auditors were quite unhappy with them. Maybe KPMG's departure is
the result of this.
[ Reply to This | # ]
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Authored by: ak on Saturday, June 04 2005 @ 01:57 AM EDT |
The website http://tannerco.com is using Red
Hat Linux. [ Reply to This | # ]
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Authored by: Night Flyer on Saturday, June 04 2005 @ 02:23 AM EDT |
I always wonder about what goes on behind the scenes...
I wonder if KPMG uses UNIX or Linux?
---
--------------
Veritas Vincit - Truth Conquers[ Reply to This | # ]
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Authored by: geoff lane on Saturday, June 04 2005 @ 02:24 AM EDT |
There is another reason why a company might change auditors at short notice...
when there is a conflict of interest.
Suppose KPMG performs the audit function for both TSG and A.N.OTHER company who
may be interested in taking over TSG. You can't have the same audit company act
for both sides during "due diligence"
Guess who else uses KPMG? Microsoft.
http://www.microsoft.com/presspass/features/2000/02-09kpmg.mspx
---
I'm not a Windows user, consequently I'm not
afraid of receiving email from total strangers.
[ Reply to This | # ]
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Authored by: Anonymous on Saturday, June 04 2005 @ 03:08 AM EDT |
I think this turn of events is a little interesting. I'm a former Big 4 CPA so
I kind of geek out over these accounting issues.
If KPMG was fired, then the notice would have said that SCO
"dismissed" their auditors. If a firm resigns from an audit, it
generally means they chose to "fire" the client. Not good.
If an auditor thinks that a client is going to go "belly up", then the
auditor will issue a qualified opinion stating that there is doubt the company
can continue to operate as a going concern. There will also be a note in the
financial statements. I haven't seen any going concern comments in SCO's
filings.
In the current accounting climate auditors are getting very nervous about dodgy
clients. I think that KPMG resigned because they don't want to be associated
with them any longer. Additionally, KPMG inherited SCO from Andersen. Back in
2002 when Andersen was imploding, most of the practices in several offices in
the NW, including Salt Lake City, were hired by KPMG.
I've been wondering how long KPMG was going to stick around.
[ Reply to This | # ]
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Authored by: wHo on Saturday, June 04 2005 @ 03:18 AM EDT |
I note SCO say " we became aware that our UNIX code and derivative works
had been inappropriately included in the Linux operating system."
This does not match the hype that it has been unlawfully included.
---
IAAL but not in the USA - My comments here are not legal advice and maybe only
worth what you paid me for them.
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Authored by: Anonymous on Saturday, June 04 2005 @ 05:06 AM EDT |
I mean, in the light of the Red Hat suit being stayed. How is it that Red Hat
are effectively enjoined from answering them indefinitely? How is that anything
remotely resembling justice?[ Reply to This | # ]
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Authored by: greybeard on Saturday, June 04 2005 @ 11:10 AM EDT |
I visited the Tanner LC webpage (www.bestcpa.com) and was amused to see this
quote:
"Creativity can solve almost any problem. The creative act, the defeat of
habit by originality, overcomes everything." George Lois
Given our long history with NewSCO's "creative" ways with the law and
press, they should fit right in.
---
-greybeard-[ Reply to This | # ]
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Authored by: SilverWave on Saturday, June 04 2005 @ 12:30 PM EDT |
We know what the auditors **mean**...
It may not be printable but
its not a vote of confidence in SCO business or ethics now is it?
Company directors may be easily misled in some areas, but this gets them where
they live..
The fact that "SCO's Auditors Resigned" should be
the first information any CEO receives... and that will say it all.
Then it will be a goodbye that lasts past the end of the world.
Newspeak
In connection with the audits of the two fiscal years ended October
31, 2004 and the subsequent interim periods through June 2, 2005, there were no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of KPMG, would have caused
KPMG to make reference to the subject matter of the disagreements in connection
with its reports.
The audit reports of KPMG on the
Company's consolidated financial statements as of and for the years ended
October 31, 2004 and October 31, 2003 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles.
--- "They [each] put in one hour of work,
but because they share the end results
they get nine hours... for free"
Firstmonday 98 interview with Linus Torvalds [ Reply to This | # ]
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Authored by: SilverWave on Saturday, June 04 2005 @ 01:20 PM EDT |
Very interesting
Sarbanes-
Oxley Summary
SOX Section 302 - Corporate Responsibility for
Financial Reports
a) CEO and CFO must review all financial reports.
b)
Financial report does not contain any misrepresentations.
c) Information in
the financial report is "fairly presented".
d) CEO and CFO are responsible
for the internal accounting controls.
e) CEO and CFO must report any
deficiencies in internal accounting controls, or any fraud involving the
management of the audit committee.
f) CEO and CFO must indicate any material
changes in internal accounting
controls.
--- "They [each] put in one hour of
work,
but because they share the end results
they get nine hours... for free"
Firstmonday 98 interview with Linus Torvalds [ Reply to This | # ]
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Authored by: Anonymous on Saturday, June 04 2005 @ 05:01 PM EDT |
But my bet would be that SCO had just got too small to bother with, coupled
maybe with a wish not to be involved in the tudying up when the ship sinks.[ Reply to This | # ]
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Authored by: DaveJakeman on Monday, June 06 2005 @ 07:40 AM EDT |
KPMG have a good reputation; SCO do not. KPMG are very aware of the reputation
they have and have worked hard to get there. That is one very good reason for
KPMG to resign: they wouldn't want anything of SCO's demeanour to rub off on
them. An "honorable exit" does not allow KPMG to distance themselves
from SCO, whereas resigning does so in no uncertain terms.
There might be some other reason for KPMG to resign, but they are smart enough
not to sting their former customer by passing comment, except obliquely, in a
rather minimalist kind of way, where required to by law. Something along the
lines of: "Ahem, someone's left a pile of poo in that corner over there.
Us, we're outta here."
"KPMG was clearly offered an honorable exit after it screwed up its
auditing duties in the past and got the chance to correct its negligence."
- I wonder where that comment came from? Surely not the same source as "We
have had no disagreements with KPMG and appreciate their professionalism in
serving us in the past." No, surely not.
Should some SCOundrel post a comment like "KPMG got sacked. Period.",
that would indicate this to be a hot topic we'll be seeing more of in the
not-too-distant future.
This could get more exciting than any of us had hoped. Much faster, too. Watch
this space.
---
Should one hear an accusation, first look to see how it might be levelled at the
accuser.[ Reply to This | # ]
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Authored by: DaveJakeman on Monday, June 06 2005 @ 07:53 AM EDT |
"We believe that our SCOsource licensing revenue opportunities have been
adversely impacted by our outstanding dispute with Novell over our UNIX
copyright ownership, which may have caused many potential customers to delay or
forego licensing until an outcome in this legal matter has been
reached..."
We believe our SCOsource licensing revenue opportunities have gone down like a
lead balloon because we never actually owned the UNIX copyrights in the first
place, which may cause many potential customers to fall about laughing until the
dispute is finally kicked out of the courts...
Don't you just love to paraphrase?
"If our revenue from the sale of our UNIX products and services continues
to decline, we will need to further reduce operating expenses to generate
positive cash flow. We may not be able to further reduce operating expenses
without damaging our ability to support our existing UNIX business."
Sounds like the few technical guys left are just working on maintenance. That
means there's only one direction the SCO business can go without a massive
return from SCO's new venture: Corporate Litigation.
"Additionally, we may not be able to achieve profitability through
additional cost-cutting actions."
Pretty much pared down to the bone then. They could try boiling.
"Our future UNIX revenue may be adversely impacted and may continue to
decline if we are unable to replenish these deferred revenue balances with
long-term maintenance and support contracts or replace them with other
sustainable revenue streams."
We did have another sustainable revenue stream, once, but we decided it wasn't
part of our core business strategy and probably wouldn't amount to much anyway.
It was called "Linux".
---
Should one hear an accusation, first look to see how it might be levelled at the
accuser.[ Reply to This | # ]
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