Accenture Plc, a major supplier of accounting and transaction services to the financial services industry worldwide has misstated its interest in its businesses in Malaysia. Consequently Accenture’s reported earnings may well have been overstated.
 
Accenture has consolidated the earnings of the Malaysian incorporated Accenture Sdn Bhd claiming it to be a wholly-owned subsidiary. However the records of the Malaysian Government’s Companies Commission reveal that Accenture Malaysia is owned by three Malaysian nationals who own all of that company’s stock. The company is the main entity via which Accenture conducts its business in Malaysia. Accenture has been in business in Malaysia for well over 30 years and the Malaysian operation would be considered a lucrative one.
 
Accenture has been presented with the Malaysian records, but maintains that “Accenture Sdn Bhd has been and continues to be a wholly owned subsidiary of Accenture plc.”
Accenture is maintaining that its financial statements are accurate even in light of the fact that the records of the Companies Commission are considered conclusive.
 
Accenture was once known as Andersen Consulting, and was part of Arthur Andersen (AA), once one of the largest audit and financial consulting partnerships in the world. AA lost most of its business after it was discovered that it had helped Enron Inc conceal the financial obligations which led to Enron’s demise.
  
Accenture stock is traded on the New York Stock Exchange to which it has reporting obligations. Accenture maintains that its Form 10-K annual earnings reports filed with the US Securities and Exchange Commission are accurate regardless of what the Malaysian records reveal about the ownership of the Malaysian subsidiary.
 
The discrepancy raises questions as to Accenture’s internal systems of accounting. It raises questions as to how many other subsidiaries and associated companies might be incorrectly consolidated, and hence the extent to which earnings have been overstated.
 
The company is a major provider of services to financial institutions wanting to outsource their operational processes and hence any overstatement of its earnings raises questions about its ability to provide the capital intensive resources required for high-end processing.

For example in 2004 Accenture entered into an agreement with Deutsche Bank AG which requires Accenture to provide resources such as a “state-of-the-art systems, tools and processes” to manage Deutsche Bank’s entire procure-to-pay process world-wide.

In early 2009 the NAB were forced to review and then discontinue outsourcing contracts with India’s Satyam Ltd after it was revealed that Satyam had overstated its earnings. The ANZ was forced to review its relationship with Satyam even while it maintained that its exposure to Satyam was “modest”.

Accenture’s problems with its internal accounting systems raises further questions about the systems and processes that Accenture sells its clients. One of these, Centrica Plc, is suing Accenture for damages of about $300 million, alleging that a failure of an IT system which Accenture built and installed for Centrica’s British Gas division was the source of problems in its customer services division which led to a loss of about 1 million customers. The matter is scheduled to be heard in 2011.