SOX Investigations: Isilon Systems, Inc.
April 1, 2008
An example of a recent investigation is reflected in the recent press release of Isilon Systems, Inc. (NASDAQ: ISLN). The release stated that the Company’s Board of Directors, based upon the recommendation of the Audit Committee, determined that the Company should restate its financial statements for fiscal year ended December 31, 2006, and for the first and second quarters of fiscal 2007, ended April 1, 2007 and July 1, 2007 respectively.
The release reported that the Audit Committee, assisted by independent forensic accounting and legal advisors, conducted an independent review of certain sales to resellers and other customers to determine whether commitments were made that have an impact on the timing and treatment of revenue recognition and whether the Company’s internal controls relating to revenue recognition are sufficient. The Audit Committee identified errors in the Company’s previous recognition of revenue.
The release stated that the Audit Committee concluded that none of the Company’s current senior executives engaged in improper practices or are otherwise responsible for the errors in revenue recognition.
One of the transactions restated was a sale directly to an end-user customer for which the terms and conditions were not fixed or determinable. The release states that revenue from this sale will be recognized in a subsequent period when the terms become fixed or determinable and all other criteria for the recognition of revenue are met.
The press release also contained forward-looking statements regarding future events, including statements regarding an ongoing review by the Company’s Audit Committee.
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