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The Washington Post reports this morning that auditors at Deloitte & Touche became aware of US Foodservice’s accounting problems when suppliers to the Ahold division disputed rebate figures supplied by the company. These discrepancies reportedly are of the type that led to a $500 million overstatement of profits by the company, which is the core of the accounting scandal that has enveloped Ahold.

US Foodservice, like many companies, gets rebates from suppliers for selling large quantities of their products, and outside auditor Deloitte would confirm the amounts of those rebates. But in 2002, when two suppliers said they paid less than the company was claiming, it eventually led to the auditor suspending its 2002 audit and later refusing to stand by its 2000 and 2001 audit figures.

The company current is undergoing an internal investigation, as well as probes by federal prosecutors, the Securities and Exchange Commission (SEC), and the FBI.

Central to the investigations are the activities by two now-suspended executives, Mark P. Kaiser, its chief marketing officer, and Tim Lee, a purchasing executive.

Company CEO James Miller, who has kept his job up to this point, has criticized the company’s auditors, blamed “trusted employees” who let the company down, and maintained that US Foodservice’s problems were not connected to the forced departures of Ahold’s CEO and CFO – a position disputed by Ahold’s board of directors.
KC's View:
Miller apparently doesn’t own a mirror.