NEW YORK (CNN/Money) -
Shares of Halliburton fell Wednesday after the company said the Securities and Exchange Commission was investigating an accounting practice introduced at the company at the time it was run by Vice President Dick Cheney.
Shares of Halliburton (HAL: down $0.74 to $18.61, Research, Estimates) were off about 4 percent in early afternoon trading.
The oil field drilling company said after the market close Tuesday that the investigation apparently involves a change in the way it accounted for contracts after a merger with Dresser Industries. Cheney served as CEO of Halliburton from 1995 until he was named to the Republican national ticket in July 2000.
After the 1998 merger the company began recognizing as revenue and accounts receivable the amount of money it expected to be collectible from customers for changes or cost overruns that occurred during the course of completing contracts. Details of the change in accounting procedures at Halliburton were highlighted in an article in the New York Times last week. The Halliburton statement said it believes the article prompted the probe.
Halliburton spokeswoman Wendy Hall said changes in the way contracts were handled in the industry during the late 1990s prompted the change in accounting treatment of disputed charges and cost overruns. She said other engineering and construction firms use the same accounting procedures instituted by Halliburton in 1998.
Accounting issues have gained significantly more attention from investors since last fall when energy trader Enron Corp. filed for bankruptcy amid questions about its accounting practices and the validity of its reported results.
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Hall could not give an estimate for how much was recorded by Halliburton under the changes in the accounting practice. The New York Times story that apparently prompted the SEC probe reported that more than $100 million in charges were involved.
The company's statement said it is cooperating with the SEC investigation and believes the probe will show it did nothing wrong.
"The company has continued this accounting treatment of similar items since 1998 and has never recorded a profit on a job where an unapproved claim or change order has been recorded in revenue," said the company's statement.