(Reuters) - Wal-Mart Stores Inc (WMT.N) said it found a “material weakness” in its controls over accounting for leases, which allowed for misapplication of accounting standards related to sale-leaseback transactions.
In a quarterly regulatory filing on Wednesday, the company said it did not have sufficient controls in place to "properly identify and account for leases that were subject to the sale-leaseback accounting guidance." (1.usa.gov/1NkcFGR)
It said the problems included accounting treatment for leased assets “which should have resulted in the company being deemed the owner of the leased assets.”
Wal-Mart, which had flagged the accounting issue when reporting quarterly earnings last month, said management believed related adjustments to its financial statements would be immaterial for all periods.
The company said it was revising its existing controls and procedures to properly apply sale-leaseback accounting, and the remediation is expected to be completed in the year ending January.
Reporting by Sruthi Ramakrishnan in Bengaluru and Nathan Layne in Chicago; Editing by Saumyadeb Chakrabarty