Dell, the world's second largest computer maker, has admitted that an internal investigation into its own earnings statements has unearthed a number of accounting errors and evidence of misconduct.

The beleaguered computer maker said in a statement that it had found “deficiencies in the financial control environment”.

It added that it would miss an April 18 deadline to file its annual 10K financial report to the Securities and Exchange Commission.

The discovery is a blow for Michael Dell, who recently returned to the chief executive role at the company he founded, replacing Kevin Rollins, his protégé.

Shares in Dell, which has been hit by fierce competition from rivals, fell 2.4 per cent, to $22.83, in after-hours trading.

The company noted in the statement that it was working with its independent auditors to determine whether the errors would require the restatement of previous earnings reports.

Thomas W. Luce, the chairman of Dell’s audit committee, said: “As we move toward the conclusion of our investigation, we are committing the time and resources required to ensure a thorough and comprehensive review and resolution of all identified issues and the implementation of appropriate remedial measures.”

The company did not say how much longer the internal investigation would last.

In August company officials said that Dell had received a letter from the SEC in August 2005 asking broad questions on revenues.

The investigation has since expanded into a formal probe by federal investigators.

Dell also faces a slew of shareholder lawsuits and the US Attorney for the Southern District of New York has subpoenaed documents related to Dell’s financial reporting since 2002.

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