The company said yesterday that despite recent actions to remedy the financial irregularities, testing was not complete.

Thus Constellation's chief executive and chief financial officer were unable to verify that the weakness in internal controls had been remedied.

The admission comes as the US-based Constellation Brands seeks to sell three local wineries and more than 20 vineyards to streamline its Australian business in the face of an international wine glut.

Following a review of its own sprawling winery operations earlier this year, Foster's announced plans to dispose of 33 properties. To date, Foster's has sold 10 vineyards, or 25 per cent of the assets it has for sale.

Constellation's flawed reporting relates to bulk inventory accounts at its Australian wine business, specifically the reconciliation and review controls for vineyard farming costs, cost accumulation and finished goods by respective vintage year.

Reporting for the quarter to August 31, the company said it had implemented several corrective measures to fix the accounting irregularity.

''However, while testing of these remedial actions is targeted for completion by the end of the company's fiscal year, the testing was not completed as of the end of the period covered by this report.''

Constellation warned that its wine, beer and spirits business faced a challenging trading landscape that made it difficult in Britain and Australia to recover cost increases.

The continued surplus of Australian wine had led many British retailers to create and build private-label brands in the Australian wine category, using cheap bulk wine.

Net sales by Constellation's wine division fell to $US876.8 million ($A961 million) for the second quarter of 2009-10 from $US956.5 million in the 2008-09 second quarter, an 8 per cent decrease.

Constellation is one of the largest competitors to Foster's in Australia.

Constellation shares closed unchanged at $1.81.