Xerox Corp said the U.S. Securities and Exchange Commission is investigating certain accounting practices at Affiliated Computer Services, which it bought in 2010 for $5.5 billion.
The investigation is focused on whether revenue from some ACS equipment resale deals should have been presented on a net rather than gross basis, primarily before the acquisition, Xerox said in a regulatory filing.
Xerox moved into business services with its purchase of ACS, the company's biggest deal in its 106-year history. The company now gets more than half of its revenue from services.
Xerox said the president of its services division had received a "Wells notice" from SEC staff.
A Wells notice is the document the SEC sends to a firm or individual when it plans to recommend bringing charges. Recipients of Wells notices are given a chance to explain why the SEC should not file a lawsuit.
Xerox said two other individuals, a current employee and a former employee, have also received Wells notices.
The SEC staff has advised it will not recommend charges against Xerox, the company said.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Don Sebastian)