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Corporate Cock-Ups
Filed in archive Compliance by leon on February 28, 2006
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Welcome to Dumbsville.

First, a red-faced H&R Block, which helps millions of people do their taxes, comes out with the embarrassing news that it messed up its own tax bill and that it owes another $32 million in back taxes.

Alexander Paris, an analyst at Barrington Research in Chicago, said that might not be unusual. Still, he said, it's not a good look. "A lot of companies are going back and reviewing their controls because of Sarbanes-Oxley and finding tax errors. But for a company like H&R Block, it was particularly embarrassing."

Actually, more than embarrassing. The company has said it will have to restate its earnings back to 2004. Adding to its problems are the glitches in its new whizz-bang software distribution system which left some offices unable to process taxes.

Meanwhile, Ernst & Young has gone and lost a laptop containing confidential information, like the social security numbers and personal details of its customers. And one of those customers happens to be Sun Microsystems CEO Scott McNealy. E&Y is Sun's auditor and provides Sarbanes-Oxley consulting for Sun. Well, for now.

And if that's not bad enough, security software firm mcafee has fessed up to a bad data breach - it's lost the personal information of more than 9000 of its employees, including their names, social security numbers and McAfee stock holdings. Ouch! The external auditor Deloitte & Touche has to take some of the blame. Turns out the auditor had left an unencrypted CD containing all that information in an airline pocket seat on December 15. The auditor didn't tell Deloitte about it until January 8, and it took Deloitte another 3 days to break the news to its client.

That's bad enough. But how is it that a computer security company can't make sure that sort of data is encrypted and kept under tight control. Try and work that one out!

Hasn't been a great year for McAfee. Soxfirst readers will remember that it was recently pinged $50 million for accounting shenanigans going back to fiscal 2000.

Still, McAfee is not Robinson Crusoe when it comes to data breaches. The Privacy Rights Clearinghouse provides a full list of data cock-ups since last year.

Permalink: Corporate Cock-Ups
Tags: tax  McAfee 
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