Wanted: Reliable Abacus for Nortel Accountants

Nortel Networks has discovered that even more of its past revenue was reported prematurely than originally thought when it announced yet another restatement of its financial reports about a month ago according to reports today in the Canadian press.

The telecom-equipment vendor, which has been bogged down in accounting problems for more than two years, said additional problems were uncovered as part of the restatement process announced March 10.

Nortel’s accounting problems have resulted in regulatory and criminal investigations, the firing of several top executives including former chief executive Frank Dunn, and damaged the technology company’s reputation in financial circles.

Nortel said it has determined that the accounting standard it is now applying “requires an analysis of individual contract deliverables such as hardware, software and/or services and their fair value in order to determine the time pattern of revenue recognition.” That is different than the previous accounting method the company used which relied on estimates based on percentage of work completed.

The company added that as a result of this work, additional revenue recognised in prior periods — beyond what was expected a month ago — will be restated and deferred to future periods.

“The company will be in a position to determine the amounts of additional revenue deferral and periods impacted upon completion of this work.”