AlarmForce review discovers billing errors
Toronto-based AlarmForce Industries announced Wednesday that, based on a review of its customer cancellation practice, it had continued to charge some of its residential customers monitoring fees after they had cancelled their subscriptions but had not returned their AlarmForce equipment.
Retroactive to Aug. 1, 2013, the company says customers who have been incorrectly billed will receive a refund plus interest.
The review was conducted by the company as the result of due diligence ahead of a potential sale. The billing error could also impact its reported revenue for the period in question.
According to AlarmForce’s company statement on the matter:
During the course of this review, the Company’s cancellation practice was raised as an issue. Upon closer examination, and with the assistance of outside advisors, the Company determined that immediate action was required to change the practice to remedy this situation.
The Company also announced that as a result of this change in practice, it is undertaking a detailed examination of its revenue recognition policies for the periods starting fiscal Q4 2013 for revenue generated from customer contracts after a customer had requested cancellation of services. Where legislation governing consumer agreements prohibit charges made after cancellation notices, the Company’s preliminary conclusion is that the cancelled subscription revenue should not have been recognized. The Company may need to restate reported revenue for some or all such previously reported financial results in relation to charges previously recognized from cancelled customer agreements where the Company’s practice did not comply with such legislation.
Due to the scope and work involved in this review, the Company does not expect it will have completed the necessary work to assess any required restatement and for the reporting of its quarterly financial results by September 14, 2016. The Company will provide timely updates as to the expected date of reporting of its financial results.