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ID NEWS: Sysco CEO Schnieders spells out broadline leader's accounting and vendor allowances policie

Because of the negative industry publicity engendered by accounting irregularities identified at U.S. Foodservice, Columbia, MD, Sysco Corp.'s Chairman and CEO Richard J. Schnieders has made this statement about the Houston-based broadline leader's own policies: "Vendor allowance accounting is not an issue at Sysco. Since the release of our fiscal 2003 second-quarter 10-Q, we have evaluated the provisions of the Emerging Issues Task Force (EITF) 02-16 'Accounting by Customers for Cash Considerations Received from a Vendor" and found that our policies, which have been in place for many years, are consistent with EITF 02-16."

Schnieders goes on to say: "Sysco's accounting policies related to the timing of income recognition of vendor allowances are consistent with Generally Accepted Accounting Principles (GAAP). Sysco records vendor allowances, net of any related expenses, as a reduction of cost of goods sold in the period when the activities are completed (e.g., food shows), thresholds are met, or when the products are sold for which the promotional allowances are given."

Promotional allowances "are fundamental to many industries throughout the country," Schnieders further notes. "They are common not only in our industry but also in pharmaceutical wholesaling, retail, automobile and other industries. Sysco places significant focus on the oversight of proper accounting of these allowances, including ongoing external and internal auditor reviews."

Furthermore, when Sysco changed auditors in fiscal 2002, the new auditors examined not only 2002 financial statements but also those of the two prior years, and no changes resulted, Schnieders points out. "Finally, we have unique financial controls that provide us with many operational and financial metrics on a weekly basis, allowing us to closely monitor the activities of our operating companies. Our vendor allowance accounting policies and procedures are appropriate."

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