Price Waterhouse Letter On Future Healthcare Made Public
CINCINNATI (AP) _ Price Waterhouse charged in a letter to the federal government that it was fired as Future Healthcare Inc.’s auditor after it refused to examine the drug testing company’s books while the current chief executive officer was in charge.
The accounting firm, in a letter dated March 30 to the Securities and Exchange Commission, said there was no evidence connecting John Peckskamp to the problems of inflated revenue. But Price had concerns about ``its ability to fulfull its responsibilities while the chief executive officer remained in office.″
Peckskamp declined comment Wednesday through his lawyer, William Flynn.
On March 7, Price Waterhouse recommended Future Healthcare modify the way it accounts for contracts in progress. A week later, Future Healthcare reported that unspecified accounting discrepancies could reduce earnings.
Price Waterhouse also said in the letter that:
_ It pulled its 1993 reports for Future Healthcare after the company said its president, Timothy Ross, ``admitted that he had intentionally and improperly recorded contract revenue in fiscal years 1992, 1993, and 1994.″ Ross, who has resigned, did not return a telephone call Wednesday.
_ It questioned during a 1994 audit whether Future Healthcare could collect a high level of outstanding accounts. The company has been criticized for counting outstanding contracts as revenue.
_ Future Healthcare management balked at the auditor’s suggestion that it could improve audits by directly contacting the company’s customers. Company managers said such an audit could disturb customer relations, Price Waterhouse said.
In an addendum to the Price Waterhouse filing, Future Healthcare made these objections to the auditor’s letter:
_ Managers were not opposed to the suggested audit improvements, but wanted to be involved in contacting customers to maintain relationships with them.
_ The company never described Ross’ alleged conduct as ``intentional″ and did not say whether he was involved in questionable practices before 1994.
Future Healthcare conducts clinical studies for the pharmaceutical, biotechnology, medical device and consumer products industries.