The accounting firm that audits the books at Lancer Corp. has quit and plans to withdraw three years' worth of audit opinions, according to the beverage-dispensing company which is entangled in a federal investigation focused on Coca-Cola Co.
The auditing giant said it informed Lancer's audit committee that it had found likely illegal activities within the company that affect its financial statements, and that company officials had not addressed the problems.
KPMG's letter on Monday didn't specify any of the actions that it considered were probably illegal, Lancer said in a statement Tuesday. KPMG also told San Antonio-based Lancer that it will withdraw its audit opinions for 2000 through 2002, Lancer said.
Lancer officials did not return a call Wednesday, but company president Christopher Hughes told Dow Jones Newswires that KPMG's move caught him off guard.
“We were surprised and obviously disappointed in that our audit committee … spent pretty much eight months conducting a very thorough and independent investigation,” he said.
Last week Lancer's audit committee concluded, based on its own probe, that there was not enough evidence to determine any improper acts by Lancer's top managers or irregularities in the company's accounting.
Greg Dvorken, a spokesman for KPMG LLP in Montvale, N.J., responded that Hughes' surprise did not change the auditing firm's evaluation of Lancer's books. “We stand behind our conclusions,” he told The Associated Press.
Last month the Securities and Exchange Commission opened a formal investigation of Coca-Cola, in part over allegations by a former employee that Coke used an unreported slush fund to hide the failure of iFountain, a high-tech drink-dispensing system Lancer makes.
Matthew Whitley, a former Coke finance manager, claimed in a lawsuit that Coke and Lancer hid the slush fund by filing false financial information to the SEC about Lancer's sales.
SEC has launched a separate investigation of Lancer based on the Coke allegations.
Coke spokesman Ben Deutsch declined to comment on Wednesday.