The Securities and Exchange Commission is probing bean counting methods used by Xerox tentacle Affiliated Computer Services.
In a filing, the copier monster confirmed the SEC has been "conducting an investigation of certain accounting practices" at ACS, an outsourcing and data centre management player that Xerox forked out $6.4bn for in 2010.
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SEC scrutiny centres on whether ACS kit sales to "several customers" should have been presented on the books on a net rather than gross basis "primarily in periods prior to the acquisition".
The deals were not material to Xerox's financials in the post purchase years, and neither profits or cash flow would have been affected by the shift from net to gross sales recognition, Xerox added.
"Xerox has cooperated, and will continue to cooperate, fully with the SEC. The SEC staff has advised that will not recommend charges against Xerox," the filing stated.
Former ACS CEO, Lynn Blodgett, who is currently exec veep of Xerox and chief of Xerox Services has received a Wells notice from the SEC in "matters underlying the investigation".
Xerox said it "understands" two other individuals, current and former employees, also received Wells notices.
A Wells notice is not a formal allegation or "finding of wrongdoing", more that SEC staffers are considering bringing civil enforcement actions against individuals.
Blodgett and the others have an opportunity to submit a response to the SEC to "persuade" the folk there to not take action. All three are planning to do so, the filing stated.
Services accounted for $2.956bn in turnover at Xerox in Q2 ended 25 July, some 55 percent of total group revenues.
BPO made up 59 per cent of the services sales mix, Document Outsourcing 28 per cent and IT outsourcing the rest. All segments grew in the quarter by single digits. ®