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Kmart launches investigation of accounting practices

Kmart Corp. today announced that it launched an internal investigation after receiving an anonymous letter complaining of accounting improprieties at the Troy, Mich.-based chain.

The U.S. Securities & Exchange Commision (SEC) also authorized a private investigation after receiving the letter, which reportedly was written by Kmart employees, Kmart said.

The announcement came amid heightened focus on the role of accounting practices in the wake of the Enron scandal.

Kmart, which filed for Chapter 11 bankruptcy protection Jan. 22, said the letter was addressed to the SEC, Kmart's auditors and the company's board of directors. The board handed the letter over to its audit committee, which then contacted outside counsel and accounting consultants to conduct an independent investigation, Kmart said.

"Upon receipt of the letter, the company also contacted the SEC, which has subsequently authorized a private investigation," Kmart announced in a press release. The $37 billion company, which operates 2,100 stores, said it advised the SEC of its own in-house investigation and intends to cooperate with the SEC-authorized probe.

An SEC spokesman said the SEC would not comment on the matter.

According to Reuters, the independent investigation will be conducted by law firm Skadden, Arps, Slate Meagher & Flom and accountants Deloitte & Touche LLP.

Kmart's auditors work for PricewaterhouseCoopers LLP, Reuters reported.

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