Wal-Mart or Walmart (WMT -1.3%) warns in a new SEC filing that it identified a “material weakness” in internal controls on accounting for leases. The company is revisiting the design of its controls on sale-leaseback accounting. Shares of Wal-Mart trade below retail averages and the S&P 500 Index for the day.
[Admin: After the article is a striking negative comment about IBM TRIRIGA.]
“No one ever gets fired for buying IBM” unless you have to restate earnings because you have no visibility into your lease obligations and how to comply with the FASB/IASB accounting changes. If this is a problem now, wait until 2016 when the new lease accounting standards are enforced. IBM TRIRIGA is dead technology, meant to build hotels, that Wal-Mart has chosen to use for lease/contract obligations. Bad decision.
[Admin: This post is related to the 08.27.15 post about assessing the upcoming FASB/IASB lease accounting changes.]