Thorough re-evaluation of the American International Group’s (AIG) accounts revealed that miscalculations and incorrect valuations had hiked AIG’s net worth by US $2.7 billion, i.e. almost US $1 billion greater than what was initially estimated.
The company’s 2004 annual report therefore, will be stalled again to make the necessary accounting adjustments and the review might not be complete before May 31.
AIG stated that it expected its outside auditor, PricewaterhouseCoopers to provide "unqualified audit opinions" to the company regarding its amended accounts. However, it was possible that PricewaterhouseCoopers would present an unfavourable view about AIG’s ‘internal control over financial reporting’ because the company’s internal management structure was indeed ‘deficient’, as AIG confessed.
Errors in the five years of results of the company had occurred because of sheer negligence and unprofessional conduct of managers. AIG said that even regulators and independent auditors were partly responsible for the misleading accounts.
Nevertheless, AIG was hoping that its revised books would dispel all doubts in the minds of the investors and assure them that all discrepancies had been detected and accordingly corrected as well.
The company had dismissed Maurice "Hank" Greenberg from the seat of the chairperson and chief executive in March following evidence of the falsification of accounts. Nonetheless, Greenberg's lawyer, David Boies, stressed that the company’s present managers, directors, auditors as well as former managers had approved of the accounts which AIG was now describing as inaccurate and misleading.
He said, "The suggestion that there were inadequate financial controls at AIG is at odds with the good faith efforts of the board, AIG's auditors and the company's senior management," Boies said. "When we have an opportunity to review the information, documents and rationale that presumably underlie those conclusions, we will respond in detail."
Meanwhile, AIG shares took the highest leap in six months, up to 5.1 percent with investors showing renewed confidence in AIG owing to the confession of the accounting mistakes by the company and the pledge to correct them.
Posted
on : Thu, 05 May 2005 15:20 GMT | Business News
By : Pippa Fielding
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