Dell's Accounting Error

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Dell's Accounting Error Dell's Accounting Error Dell is one of the biggest known brands for personal computers. Even among it’s’ competitors, Dell has a strong foothold in sales. However in the year of 2007, there was a downfall on its sales due to major accounting errors in its financial statements. This paper will be discussing about the accounting principals involved, the effect of the errors and changes on Dell’s financial statements, the affect on the stockholders, and what Dell can do to improve and prevent further accounting errors. In the year of 2007, Dell has found some financial errors. Dell believes it was a cause since they have a shortage from their financial environment (Taub, 2007). However, this was not the only reason for the company in having financial error. There is a shortage of audits and instead of being dependent in its own role, they were collaborating with management. Even with a shortage of audits, there should not be a drastic error in their statements. They need to be independent in their roles instead of working with the management team. Dell’s management team is establishing, but it should be independent as well. Dell’s audit committee has conducted an investigation into some particular accounting and financial report matters. Because the company did not find out the specific error right away, they had to delay its filing of the annual fiscal report for the year ended February 2, 2007 (Taub, 2007). As soon as possible, once Dell has figured out the accounting error, the company needs to figure out what they will do to correct it. The corrections of errors need to be recorded and so Dell needs to “record its corrections of errors from its prior periods as an adjustment to the beginning balance of retained earnings in the current period” (Kieso et al., 2007, p. 1167). In addition, the company can adopt a new or change the

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