Barrett Business Services Inc. (NASD: BBSI) terminated CFO James Miller on March 3 after he informed the company’s audit and compliance committee that he made unsupported journal entries in the company’s financial records during each calendar quarter of 2013, the company announced. In addition, Barrett will restate results for the second and third quarters of 2014.

The Vancouver, Wash.-based provider of staffing and PEO services appointed board member Thomas Carley as interim CFO. Carley stepped down as chair of the audit committee to assume the interim position as the company initiates a search for a new permanent CFO.

Miller informed the audit committee of the journal entries at a meeting on March 3 and offered to resign. The company believes the entries overstated direct payroll costs by approximately $1.4 million, the correction of which will result in a corresponding increase in PEO revenue; payroll taxes and benefits expenses by a total of approximately $9.7 million; and selling, general and administrative expenses by a total of approximately $0.9 million. The entries also understated workers’ compensation expense by approximately $12 million for the 2013 year.

According to a filing with the US Securities and Exchange Commission, Barrett’s audit committee believes the improper journal entries had no effect on the company’s consolidated balance sheets or on income from operations, net income, or earnings per share for any quarter in fiscal 2013 or for the 2013 year. However, the committee also determined that previously issued financial statements from the first quarter of 2012 through the second quarter of 2015 must be restated and should not be relied upon.

The audit committee is in the process of engaging one of the “Big Four” accounting firms to conduct an independent forensic accounting investigation of the company's financial records for years 2011 through 2015, as well as the first quarter of 2016, to evaluate whether other accounting irregularities occurred during those periods.

Barrett previously announced it reached an agreement with CorVel to satisfy all medical cost containment expenses from Dec. 31, 2015, and prior for $10 million. Following consultation with an independent accounting firm, the company determined that medical cost containment expenses need to be accrued rather than recorded as a period expense.

Barrett and its independent registered public accounting firm, Moss Adams LLP, concluded that a restatement of the financial results for the second and third quarters of 2014 is required. The company expects the restatement to increase workers’ compensation expense for the second quarter of 2014 by approximately $85 million, with a corresponding decrease in workers’ compensation expense for the third quarter of 2014.