American Software (AMSWA), a maker of supply chain and information technology software, recently revealed what it characterized as newly discovered accounting trouble dating back six years.

While disclosing multiple control deficiencies in its latest annual report, American Software detailed accounting issues with its information technology staffing firm, The Proven Method, Inc., (TPM) which it sold in September 2023.

Notably, American Software says it did not catch the errors until a year after it sold TPM:

“...during fiscal 2024, the Company identified two errors impacting TPM, both of which originated during or prior to 2018…”

In addition to wrongly presenting TPM’s assets and liabilities as discontinued operations prior to the divestiture, American Software says, among other errors, it understated cost of revenue which resulted in the company:

—Overstating operating income $111,000 or 1.12% in the year ended April 30, 2023
—Understating operating income $23,000, or 0.17% in the year ended April 30, 2022

American Software sold the TPM division for $2.1 million, or 0.13% of the unit’s FY23 sales and .42% of FY24 sales.

The errors— which American characterized as immaterial— were the result of ineffective controls impacting the:

“...reconciliation of cash, accounts receivable, accounts payable, accrued compensation, and related costs and cost of revenues…”