US software company, Motive, has dropped Ernst & Young as its auditor after finding irregularities with its own accounting practices during an investigation by the audit committee.
The company, which is a provider mobile communications and broadband services, filed reports detailing several instances in which an E&Y partner disagreed with the company's accounting for software license agreements with different customers.
The firm told Motive that its internal controls - at the time at which E &Y was preparing to do an audit - were ineffective. The firm also noted 'management's intentional misrepresentation and omission from the financial statements of material facts surrounding a reseller transaction'.
The investigation – conducted with the assistance of a law firm hired by the company's new auditors, PwC – slated former Motive management for excessive pressure to close deals which had not been properly accounted for, WebCPA.com reported.
This led to the CEO Scott Harmon and his CFO, Paul Baker stepping down after a show of no confidence by the audit committee.
Motive is to restate financial statements from 2001 but remains un-audited for 2005, 2006, and the first half of 2007 will be available by the end of August.
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