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Enter the auditors:

Can't help but love the fourth quarter. It's the audited quarter. It's the quarter when a company doing something it shouldn't gets caught by its auditors -- if the auditors are diligent.

And caught is just what

CHS Electronics


appears to be, although it's unclear just what was caught and whether the auditors did the catching.

Late Wednesday, the Miami-based electronics distributor said fourth-quarter earnings were 19 cents shy of analyst estimates, leading its already swooning stock to slip another 23% to close yesterday at 7 13/16. CHS, of course, is no stranger to this column; I have reported repeated allegations by short-sellers of CHS' aggressive accounting. The short-sellers' concerns were sparked by the rapid growth of a company that has insisted for much of the last half-year that it hasn't been affected by a slowdown that has hurt most other distributors.

The rollup of non-U.S. electronics distributors saw revenue balloon to $8.5 billion last year from $1.8 billion in 1996; earnings per share during the same period leaped to $1.61 vs. 78 cents. Since much of its business is in countries where business has been bloodied, including Latin America and Russia, short-sellers suspected the bottom line was somehow blemished. CEO Claudio Osorio retaliated against these allegations last June by declaring a public war on the shorts.

Later in the year, after this column suggested Osorio and other insiders were hedging their own bets against a decline in the company's stock, he declared they would buy up to 500,000 shares of CHS stock on the open market. (The actual number is believed to have been nowhere near that amount.)

So, what's the latest? The company said that, "in coordination with its auditors, it is in the process of conducting an analysis of vendor incentives" due the company for the quarter and all of last year. Such incentives, the company said in a conference call with analysts, amount to rebates it believes it is due from manufacturers.

Typically, at the end of a quarter, if a company meets its sales goal, the rebates materialize in the form of a lower final price the manufacturer charges for products already delivered. CHS said the "discrepancies" were recently discovered, but didn't explain how they were discovered and what actually occurred other than to say that after an analysis, earnings could actually be higher that what was reported (judging by the stock's slide, nobody believes



The plot, needless to say, thickens.

BMC brouhaha:

Holy Mackerel, Batman, they're blaming this little old worthless crumb of a column for yesterday's 11.5% slide in

BMC Software


. (At least that's what a

Houston Chronicle

reporter said the chatboards were saying Thursday when he called for comment.)

Yet it was a


analyst who actually downgraded the stock about the time this column appeared. The operative word, of course, is "blame." This column merely reported what the company said in its SEC filings -- that it would need to restate a few quarters' earnings because an acquisition previously thought to be immaterial was really material. The online chatterers, apparently, believe


already knew the company would restate, so this column was making a fuss over nothing. Somebody, then, forgot to tell the Prudential analyst and all of those investors who sold their stock.

Anyway, that is a long-winded way to question whether BMC is the latest in what may be a long line of companies that could forced to make similar restatements. Go back to what

the original story said: BMC claimed it was forced to make the change by the SEC during an existing review of the company's takeover-related in-process R&D charges. The SEC is believed to be reviewing the books of dozens of other acquisitive companies. How many of those companies also did deals that they originally recorded as immaterial?

Hard to say, but the SEC slapped

Waste Management


last year for a similar issue. An agency spokesman says a staff bulletin on materiality is expected in several months. "People will have to look at both qualitative as well as quantitative information," he says.


A note to early readers of Thursday morning's column:

Donaldson Lufkin & Jenrette

analyst Joe Farley was referred to as Joe Flaherty. Sorry Joe. Just call me Hank Goldberg. Everybody else does.

Herb Greenberg writes daily for In keeping with the editorial policy of TSC, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnerships. He welcomes your feedback at Greenberg writes a monthly column for Fortune and provides daily commentary for CNBC.