Homestore Reviewing Its Accounts

Homestore.com Inc., two weeks after its chief financial officer resigned, said Friday that its board is conducting an inquiry into accounting practices.

Homestore.com, the biggest online home-listing company, also said it will restate certain financial statements.

The board’s audit committee notified the Securities and Exchange Commission of the inquiry and has hired an independent counsel and accountants to assist it, the company said.

The Westlake Village-based company has come under fire from analysts this year for using its own stock to pay operating expenses and for the way it books advertising revenue. The company’s shares are down 82% this year.

“The advertising revenue they reported seemed out of line with anything we had seen,” said Safa Rashtchy, an analyst at U.S. Bancorp Piper Jaffray Cos. “It’s possible they recorded more right away than they should have and there could have been returns that have to be recorded against revenues.”

Homestore.com shares closed up 34 cents at $3.60 on Nasdaq, before the announcement was made.

“The company is committed to doing a thorough and speedy review of the matter,” spokesman Gary Gerdemann said. “I can’t speak directly to the scope or details of the inquiry.”