NEWARK, NY -- IEC Electronics understated its excess and obsolete inventory by $700,000 in its fiscal 2014 ended last June, the company said today.

The EMS firm will restate its net loss for the period to reflect the new findings.

An audit endorsed by company management revealed the previously issued consolidated financial statements covering the company's fiscal 2014, which ended June 27, 2014, contained an error in the estimation of the excess and obsolete inventory reserve at the company's Albuquerque and SCB operating locations.

The error resulted in an understatement of cost of goods sold and overstatement of inventory. The company estimates the cost of goods sold was understated by approximately $200,000, $100,000, $100,000 and $300,000, respectively, during the four quarters.

The firm further estimates inventory was overstated by approximately $200,00, $400,000, $400,000 and $700,000, respectively, for the same periods.

The company will as a result restate its net loss for the period. The estimate net loss was $15.1 million, versus the previously stated loss of $2.1 million.

"[M]anagement has concluded that there were material weaknesses in the Company's internal control over financial reporting during fiscal 2014," IEC said. "Management will revise its conclusions as to the effectiveness of the company's internal controls during the restated periods [and] has identified steps it believes are necessary to remediate the material weaknesses and ... is in the process of developing a remediation plan."

IEC said it implementation of the remediation plan will be underway by the time it files its March quarter reports. 

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