CHICAGO, Dec. 18 (UPI) -- Ace Hardware Corp. said it is finalizing plans to correct a $152 million accounting error discovered in August, the nationwide company based in Chicago said.
The company said it expect to spend about $10 million to rectify the problem, Ray Griffith, Ace's chief executive officer and president, said in a conference call with store owners. The accounting error, which overstated profits, was discovered in August when Ace was considering moving to a corporation from a co-op, Crain's Chicago Business reported Tuesday.
"Frankly, it's embarrassing," Griffith said during the conference call. "There are oversight issues, lack of controls and policies in place that were not followed."
The board decided creating variance accounts for dealers' profit-sharing was "the fairest option," said a letter obtained by Crain's.
In the variance account allocations, 20 percent of the dealer's profit-sharing dividend -- based partially on a store owner's purchases -- would be paid in cash, the letter said. The remainder be distributed as stock placed in an account that accumulates until the dealer's portion of the overstatement is repaid, the letter said.
He said management accepted full responsibility for the error that occurred over a period of years.