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UPDATE 1-Overstock retains KPMG after firing prior auditor
December 29, 2009 / 10:27 PM / in 8 years

UPDATE 1-Overstock retains KPMG after firing prior auditor

* KPMG replaces fired Grant Thornton

* Overstock objected to earlier effort to reclassify asset

* KPMG to review earlier 2009 quarterly financials

* Shares of Overstock fall

NEW YORK, Dec 29 (Reuters) - Overstock.com Inc (OSTK.O) said on Tuesday it retained KPMG as auditor, six weeks after firing predecessor Grant Thornton and taking the unusual step of filing an unreviewed quarterly report with U.S. regulators.

KPMG will audit Overstock’s 2009 financial statements and also review the company’s quarterly information for the first three quarters of that calendar year for the online retailer of surplus and returned merchandise.

Jonathan Johnson, Overstock’s president, said the Salt Lake City-based company remains in talks with U.S. Securities and Exchange Commission staff over accounting matters that led it to file the unreviewed report for the third quarter of 2009.

Last month, Overstock said it fired Grant Thornton after that auditor revised its position on how the company should have recorded a $785,000 asset in 2008.

Overstock said a change would have required it to restate 2008 financial results and revise prior 2009 quarterly reports. It said PricewaterhouseCoopers [PWC.UL], which Grant Thornton replaced as auditor in 2009, disagreed with reopening the 2008 balance sheet.

“We were between a rock and a hard place,” Chief Executive Patrick Byrne said on the conference call. “We have two firms telling us very different things. The opposite things.”

Byrne is known for colorful shareholder letters and critiques of Wall Street practices, including naked short-selling.

It is rare for listed U.S. companies to file unaudited quarterly reports. An unaudited report could put a company out of compliance with Nasdaq listing requirements if it is not fixed in 180 days.

Overstock shares closed down 9 cents at $12.83 on the Nasdaq. (Reporting by Jonathan Stempel; editing by Andre Grenon)

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