TORONTO, CANADA -- SMTC will conduct a full physical count of its inventory at the request of its new management following the identification of an overstatement at its EMS operation in Chihuahua, Mexico. SMTC said its financial statements for 2012 and through the first three quarters of 2013 should no longer be relied upon.

The company has determined that the Mexico site has overcounted its inventory by an estimated $3.2 million, about $2 million of which was due to errors in valuation that took place period to April 3, 2011. The remainder

The valuation errors were the result of unapproved shop floor practices by workers at the site, the company said, a mistake discovered and ended during the September 2013 quarter.

The company will be adjust its inventory balance by $725,000 for the periods in and preceding 2012, and by $390,000, $410,000 and $350,000, respectively, for the first three periods of 2013. The remaining overstatement, valued at $1.33 million, will be recorded in the December 2013 period.

The errors will be immaterial to the company's 2011 results.

Just last month, SMTC named Sushil Dhiman president and chief executive, effective Jan. 6.

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