The new inquiry follows a detailed two-year investigation by the stock market regulator, the Securities and Exchange Commission (SEC), which resulted in a 7m ($10m) civil settlement in April (PrintWeek, 5 April).

The settlement was one of the largest recorded in the US, despite the company denying it had committed any wrongdoing.

Xeroxs director of corporate public relations, Christa Carone, said the companys understanding was that the latest inquiry would be into matters that had previously been settled in the SEC investigation.

Carone declined to comment on how long the inquiry could take, or the full context of the investigation.

As part of Xeroxs agreement with the SEC, it agreed to publish adjusted 2001 results and restated figures for 1997-2000, which showed that it overstated its pre-tax income by 918m ($1.4bn), or 36%, between 1997 and 2001.

The SEC alleged that the company had used a series of "accounting tricks and opportunities" to boost earnings and mislead investors about its results.

At the time, Xerox chairwoman and chief executive Anne Mulcahy said her firm was best served by putting the matter behind it. "When faced with difficult decisions we take appropriate actions," she said.

Trouble loomed as early as last week, when Xerox shareholders used the groups AGM to question the pay of some top management.

Shareholders had been concerned over pay levels, given the companys involvement in recent accounting irregularities.

A spokesman commented then that: "The feeling was that Xerox is behaving more responsibly than other companies in providing information."

Story by Andy Scott

Picture of Anne Mulcahy