Ace Hardware finds accounting shortfall
Likely will have to restate 5 years; calls off plan to convert to for-profit
Ace Hardware Corp. discovered an approximately $154-million shortfall on its books while preparing to convert from retailer-owned cooperative to a for-profit corporation and likely will have to restate its financial results for the last five years, President and CEO Ray Griffith said Wednesday.
Ace has called off the conversion plan and hired an audit consulting firm to help rectify an accounting problem that appears to date to 2002…the Oak Brook-based company has not been able to determine the source of what he characterized as a “significant accounting error.”
The chief executive said an internal review of the company’s financial documents found that its inventory total is $154 million less than its general ledger balance —the company’s primary method for recording its financial transactions.
The company’s board of directors hired Protiviti Inc., he said, to find and reconcile the error. The company’s auditing for the years in question was performed by KPMG LLP. KPMG spokesman Dan Ginsburg said the company could not comment due to client confidentiality.
“Ace’s finance staff, seasoned management team, internal audit department and even the external auditors engaged by the board failed to detect this error as it built over the last several years,” they said…