Vancouver-based Barrett Business Services disclosed Monday that its financial filing with the Securities and Exchange Commission in August 2014 “can no longer be relied upon.” The company also said it would not meet the deadline for filing its required financial report for this year’s third quarter.
The disclosure triggered a Tuesday stock sell-off. Its stock, which trades as BBSI, closed at $38.47 per share, a 27 percent drop for the day. The company’s stock price has ranged from $20.05 to $53 over the past 52 weeks. Barrett found itself targeted Tuesday by at least six law firms that sought out investors who might be eligible to file claims against it.
Barrett said its audit committee has launched an independent investigation regarding a reserve created to cover pending workers’ compensation expenses. Those expenses were reported in a quarterly filing for the quarter ending June 30, 2014. The company said its independent accounting firm, Moss Adams, “has become aware of information indicating that an illegal act has or may have occurred with respect to the June 30, 2014, workers’ compensation reserve.”
According to Barrett, the concern is ”with Moss Adams not having been provided with available information regarding the company’s June 30, 2014, workers’ compensation expense reserve in its review of the company’s second-quarter financial statements.”
Barrett said that the audit committee decided Nov. 6 that, due to the seriousness of the allegations, that it would “conduct a thorough and prompt independent investigation into whether an illegal act has occurred and the impact of any such illegal act on the company’s financial statements for the quarter ended June 30, 2014.”
The committee has retained the Portland law office of Stoll Stoll Berne Lokting & Shlachter to conduct an independent investigation. It said it would file its third quarter financial statement “as soon as practicable “after the investigation has been completed and reviewed.”
In a statement also released Monday, Barrett quoted Thomas J. Carley, chairman of its audit committee, as stating that the audit committee’s letter to the company related to the company’s decision in the third quarter of 2014 to record an $80 million charge to strengthen its workers’ compensation reserves.
“At the July 28, 2014, audit committee meeting, the audit committee concluded that sufficiently reliable actuarial data was not available to support a higher reserve for the quarter ended June 30, 2014,” Carley is quoted as saying. He says he believes the issue will have “no bearing on BBSI’s 2014 annual financial statements.”
Anthony Meeker, chairman of Barrett’s board of directors, expressed support for company management.
“We continue to have full confidence in BBSI’s management team and in the company’s continued ability to prosper and provide value for shareholders,” Meeker said.
Michael Elich, president and CEO, said: “I fully support the current investigation, and I am eager to get to the bottom of any issues so that the organization can focus on the important work we do every day.”