Xerox

Alivia Bartkowski

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Background

Xerox was founded in 1906 in Rochester, New York with its current headquarters in Norwalk, Connecticut and originally manufactured photographic paper and equipment. In 1959, Xerox released the Xerox 914, the first plain paper photocopier. Today, Xerox offers a wide variety of products and services, including printers.

Accounting Scandal

In April of 2002, the US Securities and Exchange Commission filed a complaint against Xerox, claiming Xerox deceived the public when they recorded revenue from copy machine leases. Xerox recorded the revenue as a sale instead of as revenue received over time, so it wasn't the validity of the revenue but when the revenue was received. This occurred between 1997 and 2000. Xerox's auditors, KPMG LLP, had certified Xerox's financial statements and may have been responsible. Xerox's top executives benefited by making more money, and Xerox's senior management was likely aware of the problem.
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Effect

Xerox fired KPMG LLP after working with them for 30 years. Xerox paid a $10 million fine despite not admitting or denying wrongdoing. Xerox also paid $22 million in penalties, disgorgement, and interest. Xerox's shares fell 10% during this time. Xerox is still in business and still has its Palo Alto Research Center in California.
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