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January 4, 2004

MicroMuse launches internal accounting investigation

Micromuse Inc, a US provider of service level management software, is conducting an internal investigation of its accounting procedures for the past four years, which is expected to result in a restatement of its finances.

By CBR Staff Writer

According to a company statement, the suspect accounting practices under scrutiny relate to historical expense recognition, accrual accounts, and discrete accounting entries.

Micromuse’s internal audit committee said it had retained law firm Clifford Chance US LLP as independent counsel, but added that forensic accountants from Deloitte & Touche LLP are also being bought in to help investigations and to strengthen its financial controls.

The probe has forced the San Francisco, California-based company to postpone the filing of its 10-K form for fiscal 2003, due on December 29, 2003. Sources at Micromuse also say the investigation will most probably force the company to restate its historical financial statements for its reported fiscal years since 2000.

Micromuse did not say when the inquiry would be completed or when it plans to file its 10-K. However, the company expects the restatements to have a positive impact for some periods and a negative impact for others, adding that the restatements will not affect historically reported revenues or the company’s current cash position.

The total cost of the probe is expected to be in the region of $2m.

Separately, Micromuse also issued a revised guidance for its fiscal first quarter, with revenues now estimated to be at the higher end of between $34 and 35m guidance issued earlier last year.

For fiscal 2003, Micromuse returned revenues of $125.4m and a net loss of $4.1m.

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This article is based on material originally produced by ComputerWire.

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