SEC Launches Probe Into Home Depot Accounting

The Securities and Exchange Commission has opened an informal inquiry into how The Home Depot Inc. (HD), the nation's largest home improvement store chain, records credits it receives from vendors for defective merchandise, a company spokesman said Thursday.

The Atlanta-based company complied with the SEC's request several months ago for information related to Home Depot's return-to-vendor procedures, spokesman Jerry Shields said. The current status of the inquiry is not clear.

Shields would not elaborate on the inquiry.

"Our internal financial controls related to vendor policies preclude any potential for a material adverse impact on the company," Shields said.

When customers return defective merchandise, Home Depot sends it back to the vendor, which gives the company a credit to cover the cost. Home Depot said those credits don't boost its net profit.

SEC spokesman John Heine declined to comment.

Home Depot shares fell 40 cents to close at $42.55 Thursday on the New York Stock Exchange.