Sept. 6, 2007 - $154 Million Shortfall Halts ACE Conversion Plan
It was previously reported that the Oak Brook, IL-based retailer would operate as one giant corporation instead of thousands of independent stores. The discovery of the accounting error in the process of preparing documents to file with the Securities and Exchange Commission throws a wrench in the attempt to better compete with big-box rivals Home Depot and Lowe's.
According to the company, it also means, in order to fix the shortfall, dealers likely will have to forgo most, if not all, of their 2007 patronage dividends - an annual payment in the form of cash and stock tied to Ace's gross profit.
Ace hired Protiviti Inc., an independent consulting firm that specializes in inventory reconciliation, to identify the cause and resolve the discrepancy in its books. “For now it appears a difference between the company's general ledger balance and its actual inventory records led to an overstatement of gross profit and, in turn, the patronage dividend paid to dealers,” the Chicago Tribune reported. There is no evidence of missing inventory or theft.