Shareholders of the former Polaroid Corp. on Tuesday sued KPMG LLP, the company's former accountants, alleging the firm violated accounting guidelines when it audited the company before its bankruptcy.
The suit, filed Tuesday in federal court in New York, comes four days after the release of a report by an independent examiner who cleared the company of allegations it tried to make its finances look worse than they were in order to justify a bankruptcy filing. However, the report raised questions about the company's accounting and concluded that Polaroid's finances were worse than it disclosed.
The lawsuit, which requests class action status, and is based on material in that report, claims that a 2000 audit and subsequent annual filing approved by KPMG gave an improperly rosy picture of Polaroid's finances. Among other things, it claims that KPMG included provisions for tax-deferred assets that did not meet the standards of general accounting principles.
KPMG spokesman George Ledwith said he had not seen the complaint but criticized the examiner's report. “It is clear to us that a great deal of the material in that report has been taken out of context or is simply wrong,'' he said.
A spokesman for the reconstituted Polaroid, a separate entity owned by One Equity Partners, a division of Chicago-based BankOne, did not immediately return a phone message.
The suit also names as defendants former Polaroid CEO Gary DiCamillo and several other former executives. Polaroid filed for bankruptcy in October 2001.