Xerox Corporation, a company based in Stamford, Connecticut, is involved in the production and management of documents in the form of copy machines, fax machines, and commercial printing equipment. In the late 1990s, competition had a negative impact on Xerox sales (among others things, computer printers were replacing copiers to generate print copies). A poorly organized business restructuring also caused administrative problems and billing and sales slowdowns for Xerox. The accounting department at Xerox began being pressured to compensate for the poor sales results with accounting measures. Xerox “assigned accountants numerical goals to produce profits through accounting actions. It just became standard operating procedure that, you know, you look to the accountants to find income.” 14 In April 2002, Xerox settled a case with the SEC, agreeing to pay a $10 million fine and restating its results back to 1997. The restatement showed that it had recorded $6.4 billion of revenue early and had overstated its pretax income by $1.41 billion over the five years, a 36% overstatement. Paul R. Berger, Associate Director of Enforcement at the SEC, described the actions of Xerox executives in the SEC enforcement notice: “Xerox’s senior management orchestrated a four-year scheme to disguise the company’s true operating performance. Such conduct calls for stiff sanctions, including in this case, the imposition of the largest fine ever obtained by the SEC against a public company in a f
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