Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

Want to save this page for later?


The Daily

SEC Charges Two Companies with Accounting Shenanigans

Chris Gaetano
Published Date:
Apr 22, 2016
SECURITIES-AND-EXCHANGE-COMMISSION-facebookThe Securities and Exchange Commission announced charges against two companies who both have been accused of manipulating their accounting to hide their true financial health. 

The first involved tech firm Logitech International, which the SEC said fraudulently inflated its FY2011 financial results to meet earnings guidance. The firm was accused specifically of manipulating its warranty accrual accounting and failing to amortize intangibles from an earlier acquisition. The SEC also said Logitech minimized the write-down of millions of dollars worth of parts, which the firm said would be used to build finished products, despite there being no plans of the sort. Logitech International agreed to pay a $7.5 million penalty. Logitech’s then-controller Michael Doktorczyk and then-director of accounting Sherralyn Bolles agreed to pay penalties of $50,000 and $25,000, respectively

In the other case, a battery company called Ener1 has been accused of materially overstating revenues and assets for year-end 2010, as well as overstating assets in the first quarter of 2011. The SEC said the company failed to impair investments and receivables related to one of their biggest customers, an electric car manufacturer. Former CEO and chairman of the board Charles L. Gassenheimer, former chief financial officer Jeffrey A. Seidel, and former chief accounting officer Robert R. Kamischke agreed to pay penalties of $100,000, $50,000, and $30,000, respectively.

During the course of investigating Ener1, the SEC also found that the PWC audit partner assigned to the company violated 
violated PCAOB and professional auditing standards when he failed to perform sufficient procedures to support his audit conclusions. The SEC suspended the partner, Robert D. Hesselgesser, from participating in the financial reporting or audits of public companies for at least two years.