General Electric is under SEC investigation over its business practices, the company acknowledged Wednesday. File Photo by Urs Flueeler/EPA
Jan. 24 (UPI) -- The U.S. Securities and Exchange Commission has opened an investigation into General Electric's accounting practices, the company acknowledged on Wednesday.
The SEC investigation is in its early stages and will look into GE's revenue recognition and controls for long-term service agreements, GE CFO Jamie Miller said.
General Electric recently disclosed is would take a $6.2 billion charge in the fourth quarter and planned to set aside $15 billion over seven years to pay for obligations held by its financial unit.
"I think we have got a good inventory of what we see," Miller said to investors on GE's fourth-quarter earnings conference call Wednesday. "And as we go through this, I think our reserves are appropriately set ... If we need to take additional actions in GE Capital, we'll take them. But it's really too early at this point to speculate on how early that could land."
GE said it is "cooperating fully with the investigation."
The conglomerate said it would restate its 2016 and 2017 financial results as it adjusts its accounting procedures.
In its earnings report for the fourth quarter, GE reported a $9.83 billion loss.
The company's profit dropped to $2.33 billion, down from $4.08 billion in last year's fourth quarter, and revenue fell 5.1 percent to $31.4 billion. The company is struggling to recover under new chief John Flannery, who took over in August.
Flannery said there's "early progress we are seeing from our key initiatives" and that his management team "focused on operational execution, capital allocation and deep cost reduction to position us for continued improvement in 2018."
Of the company's three core divisions, healthcare performed the best, with profits up $1.16 billion.