Casino Data Systems switches auditors

David Strow

Wednesday, Dec. 1, 1999 | 10:38 a.m.

Casino Data Systems Inc. of Las Vegas has fired its accounting firm, but company officials and analysts said there aren't any ulterior motives behind the move.

In a form filed Tuesday with the Securities and Exchange Commission, the Las Vegas company said it dismissed Big Eight accounting firm KPMG LLP as its auditor, effective Nov. 23. It has retained Deloitte & Touche as its new accountant.

"After several conversations with both (Deloitte & Touche) and KPMG ... we decided we need a stronger local presence with our professional services partner," said Lee Lemas, Casino Data Systems chief financial officer.

The dismissal of an accounting firm is usually met with great concern by investors, since it often is the result of a dispute between a company and an auditor over financial issues.

But that wasn't the case between KPMG and Casino Data.

In its SEC filing, Casino Data stated that KPMG and the company had no disputes over any accounting matters over the past two years, and that KPMG did not give an adverse opinion to Casino Data's financial statements as reported for the last two fiscal years.

"There were no disputes between the company and KPMG as to matters of accounting principles, financial statement disclosure, or audit scope or procedure," Casino Data stated in its filing. In an enclosed letter, KPMG said it agreed with Casino Data's statements.

"The minute you see a change in accounting firms, your ears always perk up," said Dave Ehlers, chairman of Las Vegas Investment Advisors. "When you see this particular language, your ears go back to the normal position.

"You know if there were no accounting disputes, the change isn't being made for the purpose of lower or higher income recognition. There is no controversy."

Ehlers noted that the company had been performing well financially over the past year. Over the first nine months of 1999, Casino Data has recorded a profit of $3.91 million, or 22 cents per share, up from $732,000, or 4 cents a share, in 1998. Revenues are up 48 percent to $58.5 million.

"We think the company's outlook is excellent," Ehlers said.

Investors also appear unconcerned about the filing. In late morning trading today on Wall Street, Casino Data was trading at $3.63, up three cents.