Barnes & Noble Discloses SEC Investigation; Shares Drop
Barnes & Noble disclosed in its quarterly earnings report filed with the SEC that the SEC's regional office in New York began an investigation in October related to two matters involving the retailer. Shares were down about 9% around 1:45 p.m.
The SEC's first inquiry is related to the restatement of Barnes & Noble earnings announced in July of this year. In a filing on July 29, the company disclosed that in April of this year it had "identified a material weakness in its internal control over the reporting and review of the reconciliation of its Distribution Center accrual," and accordingly "incorrectly overstated certain accruals over an extended period of time," prior to April, which were the "result of inadequate controls over the accrual reconciliation process at its distribution centers."
As a result of the incorrect accounting procedures, in July Barnes & Noble disclosed "[t]he material weakness...resulted in misstatements in the Company's annual and interim financial statements."
In addition to the investigation related to the account restatement, the company also disclosed the SEC inquired about a separate issue related to an employee alleging that Barnes & Noble did not appropriately allocate information technology expenses between its Nook and retail businesses for the purposes of segment reporting.
Barnes & Noble said of the investigation that it "is cooperating with the SEC, including responding to requests for documents."
The article Barnes & Noble Discloses SEC Investigation; Shares Drop originally appeared on Fool.com.
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