Peregrine fears $100m audit glitch

Peregrine's share price dived

California-based software firm Peregrine Systems has said it has unearthed potential accounting irregularities worth up to $100m, sending its shares plunging more than 60%.

The firm also said two top executives have resigned - chairman and chief executive Steve Gardner, and chief financial officer Matt Gless.

Peregrine's shares dived more more than 60% on New York's Nasdaq index as Wall Street opened on Monday.

The stock price slump reflects heightened investor sensitivity to accounting irregularities in the wake of the collapse of energy-trading giant Enron.

Enron fallout

The news came on the day that criminal proceedings opened in Houston against Peregrine's former auditor, Arthur Andersen, for its role in the Enron affair.

Andersen, which signed off the energy giant's books, is on trial for destroying Enron-related documents which were being sought by US stock market regulators.

Peregrine is one of more than 100 US firms to have dropped Arthur Andersen since the Enron collapse.

The software maker appointed rival accountants KPMG in April.

New auditor

On 30 April, its shares fell when it delayed the publication of its full year financial results, saying KPMG needed more time to sign off the books.

Now KPMG has done so, the findings may require Peregrine to restate its accounts - and by implication its earnings - for its last two financial years.

"The scope and magnitude of these matters have not been determined," the firm said in a filing with the US Securities and Exchange Commission.

The company's board has begun an investigation to gauge the extent of the problem, which appears to hinge on misreporting of revenue.

Some transactions "were recorded initially as revenue from the company's indirect channels and may have been written off in later quarters," Peregrine said in its filing.

"These channel transactions and other accounting matters to be investigated may impact financial results for periods in fiscal 2002 and prior," it added.

Interim boss

The firm named an acting chief executive, Rick Nelson. It appointed Fred Gerson, currently chief financial officer of the San Diego Padres baseball team, as acting CFO.

Ex-chairman John Moores stepped back into the role he vacated in mid-2000, once again splitting the roles of chairman and chief executive.

To help him get to the bottom of the accounting problems, the board drafted three directors onto a special executive panel and appointed an outside senior counsel.