Agency Pays $12 Million to Settle Accounting Case

NEW YORK -- The Interpublic Group of Companies, the large advertising concern, agreed on Thursday to pay a $12 million fine to settle a Securities and Exchange Commission investigation into its accounting practices, The New York Times reported.

The issue was one of accounting fraud in intercompany transactions at McCann Erickson, Interpublic’s flagship unit. The regulators accused McCann Erickson of fraudulently misstating its results by recording as receivables intercompany charges that should have been booked as expenses, the paper reported.

Interpublic and McCann settled the case Thursday without admitting or denying the accusations, the paper reported.

The accounting problems arose in 1997, and were symptomatic of the acquisition mania among advertising companies in the 1990s. The Securities and Exchange Commission complaint focused on Interpublic’s restatement of its financial results for 1997 to 2002, which amounted to $181 million in additional charges, the paper reported.

-- NYSSCPA.org News Staff

Posted on 5/2/08