Finance analysis - Dell Inc. (DELL) revealed that it is delaying the filing of the Form 10-QWo

Dell Inc. announced a delay in filing its Form 10-Q for its recently completed second quarter. This postponement was due to an ongoing informal investigation by the U.S. Securities and Exchange Commission (SEC) and an internal review into the company's accounting and financial reporting practices. The situation also led to the suspension of Dell's share buyback program and a subpoena for related financial documents from the U.S. Attorney for the Southern District of New York.

Why Did Dell Delay Its 10-Q Filing?

The global computer systems manufacturer stated that it was unable to file the Form 10-Q because of questions raised during the SEC investigation and a subsequent independent investigation initiated by the Audit Committee of its board of directors. The U.S. Attorney's office had subpoenaed documents pertaining to Dell's financial reporting from 2002 to the present, adding another layer of scrutiny.

What Prompted the Investigations?

Dell had previously disclosed on August 17, when releasing its second-quarter results, that it received notice from the SEC in August 2005 regarding an informal investigation. At that time, the SEC's notice clarified that the investigation was not an indication that any violations of law had occurred. The SEC had requested information concerning revenue recognition and other accounting and financial reporting matters for certain past fiscal years, and Dell had been cooperating.

During this process, Dell discovered information that raised potential issues related to certain periods prior to fiscal 2006. While the company initially believed these issues would not have a material impact on its financial position or reported results of operations for the relevant years, its audit committee, acting on management's recommendation, launched an independent investigation.