In a filing to the U.S. Securities and Exchange Commission, Siemens said its anti-corruption controls as of September 30 -- the end of its fiscal year -- were insufficient to prevent managers from misusing funds.
FRANKFURT (Reuters) - German industrial group Siemens <SIEGn.DE> said it has identified "material weakness" in its internal controls over financial reporting that could affect its ability to report its results accurately.
In a filing to the U.S. Securities and Exchange Commission, Siemens said its anti-corruption controls as of September 30 -- the end of its fiscal year -- were insufficient to prevent managers from misusing funds.
Siemens is under investigation from authorities around the world, including the SEC, for suspected corrupt practices, including the alleged establishment by its employees of slush funds used to pay bribes running into billions of dollars.
"We have concluded that our internal control over financial reporting was not effective as of September 30, 2007," Siemens said in the document.
!ADVERTISEMENT!"As a result, our ability to report our results of operations accurately and in a timely manner, including our ability to make required filings with government authorities, may be adversely affected."
Accounting firm KPMG, which has long audited Siemens' financial statements, concurred in a report published as part of the 20F filing with Siemens' assessment that its internal anti-corruption controls were ineffective.
"As of September 30, 2007, the investigations of this failure, and the implementation of the company's remediation plan to address it, were not far enough advanced to provide a sufficient level of assurance that such circumvention or override of controls and misuse of funds by management would be prevented," KPMG said.
"We do not express an opinion or any other form of assurance on management's statements referring to corrective actions taken after September 30, 2007," it added.
Elsewhere in the filing, Siemens said it expected to finalize the sale of its SEN corporate telecoms business in the first half of calendar 2008.
Siemens has been trying to sell the unit, which represents most of the rump of its formerly huge communications division, for about two years. It wrote down SEN's value by 567 million euros ($836 million) during fiscal 2006/07, it said.
(Reporting by Georgina Prodhan; Editing by Louise Ireland)
