South-Western - Management  
Alleged Accounting Irregularities at New York Unit of Adecco Still a Mystery
Topic Control
Key Words Financial controls, accounting
InfoTrac Reference CJ112661093
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News Story

Adecco stunned investors with news of accounting irregularities at its Long Island-based North American headquarters. Adecco stock is tumbling in value and customers are growing nervous. Some feel the mistake could lead to a relocation of the company's headquarters.

Adecco is not revealing any details, which is causing some negative speculation. Since Adecco announced "material weaknesses" in financial controls on Jan. 12, its shares have lost more than a third of their value. At least eight class-action suits have been filed by shareholders, alleging the company inflated its stock by misrepresenting its finances.

One person close to the company revealed that the accounting methods used by Olsten and Adecco differed, causing some items to be entered incorrectly in the combined company's books, and there was no wrongdoing.

Officials of the company continue to decline comment.

Questions
1.

This article demonstrates what can happen to a company when they have insufficient controls in place. Which step of the control process broke down at Adecco? Why is this kind of control necessary, particularly for a public company?

2.

Name two financial statements that help control organizational performance.

Source "Alleged Accounting Irregularities at New York Unit of Adecco Still a Mystery," Knight Ridder/Tribune Business News January 29, 2004.
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