According to a press release, Taleo Corp. has announced that the Company’s previously issued financial statements for the years ended December 31, 2006 and 2007, and the interim financial statements for the quarters ended March 31, 2008 and June 30, 2008 will be restated to make corrections to the timing of recognition of approximately $3 million of consulting services revenue previously recognized as delivered under the proportional performance method, and the timing of revenue recognition of approximately $200,000 for set-up fees, an element of the Company’s application services revenue.
Deloitte and Touche, Taleo’s independent auditors, had requested back in November that the company review its revenue recognition practices. The deferment comes as a result of that consultation. The company’s Audit Committee of the Board of Directors made the decision to restate the financial statements on February 20.
According to an article on CNNMoney.com, the Company has determined that recognition of consulting revenue as a separate unit of accounting in a multi-element arrangement, pursuant to Emerging Issues Task Force No. 00-21, “Revenue Arrangements with Multiple Deliverables,” was not appropriate in certain of its customer arrangements in which application services and consulting services were sold in the same arrangement.
This correction will result in approximately $3 million of consulting revenue previously recognized on the basis of proportional performance, as has been the Company’s historical practice, being recognized ratably over the expected attribution period of the associated arrangement.
Taleo also announced its intention to file its restated financial statements, as well as its delinquent quarterly report on Form 10-Q for the quarter ended September 30, 2008, as soon as practicable following its consultation with the Office of the Chief Accountant.
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