NEW YORK: Interpublic Group's recent accounting woes reared their head again last week when the marketing giant announced that the Securities and Exchange Commission has upgraded its previously disclosed examination into the company's financial restatements to a formal inquiry. Such an upgrade can be a prelude to the issuing of subpoenas. IPG said it is cooperating with the investigation.
IPG's PR holdings include Weber Shandwick Worldwide, Golin/Harris International, and The MWW Group.
Following the announcement, Standard & Poor's warned the company that it may decide to downgrade its debt to non-investment grade, or so-called junk status.
"There is no remaining cushion in the rating to withstand any negative news or a disappointing earnings performance," said S&P analyst Alyse Michaelson.
Last year, the company restated $180 million in earnings dating back to 1996. IPG blamed the problem on a bookkeeping snafu at its McCann-Erickson advertising unit.
Though relatively small, the revision proved embarrassing for management because IPG was forced to revise the restatement upward on two occasions.