Tag: Accounting Fraud

Four is the Loneliest Number: How strategic rounding of EPS results may predict aggressive financial reporting

While the occurrence of quadrophobia in a company may represent legitimate accounting discretion and may not necessarily indicate any potential violations of accounting standards or efforts to manage earnings, the study took a deeper look to determine, if management practiced strategic EPS rounding, would they be more likely to engage in other forms of problematic financial reporting behavior. Based on…

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SEC Charges The Kraft Heinz Company and Two Former Executives for Engaging in Years-Long Accounting Scheme

The Securities and Exchange Commission today charged The Kraft Heinz Company with engaging in a long-running expense management scheme that resulted in the restatement of several years of financial reporting. The SEC also charged Kraft’s former Chief Operating Officer Eduardo Pelleissone and its former Chief Procurement Officer Klaus Hofmann for their misconduct related to the scheme. According to the SEC’s…

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Luckin Coffee Agrees to Pay $180 Million Penalty to Settle Accounting Fraud Charges

The SEC’s complaint alleges that, from at least April 2019 through January 2020, Luckin intentionally fabricated more than $300 million in retail sales by using related parties to create false sales transactions through three separate purchasing schemes. According to the complaint, certain Luckin employees attempted to conceal the fraud by inflating the company’s expenses by more than $190 million, creating…

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SEC Charges Super Micro and Former CFO in Connection with Widespread Accounting Violations

According to the SEC’s orders, Super Micro executives, including Hideshima, pushed employees to maximize end-of-quarter revenue, yet failed to devise and maintain sufficient internal accounting controls to accurately record revenue. As a result, the orders find, Super Micro improperly and prematurely recognized revenue, including by recognizing revenue on goods sent to warehouses but not yet delivered to customers, shipping goods…

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SEC Accounting and Auditing Enforcement Actions Down Slightly in 2019 | The D&O Diary

According to a new report from Cornerstone Research, the number of accounting and auditing enforcement actions the SEC initiated in 2019 was down slightly from the number initiated in 2018, but the number remained near the 2014-2018 average. Monetary settlements of accounting and auditing enforcement actions during 2019 totaled approximately $626 million.  The June 25, 2020 report, which also summarizes…

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SEC Watching for Signs Companies May Blame Old Problems on Virus

“We’re all very aware of the challenges that companies and individuals are facing during this time with regard to financial reporting, accounting, and auditing. We’re also very much aware of the history of economic downturns and how these situations can reveal past errors or frauds,” said Matt Jacques, chief accountant for the Division of Enforcement at the Securities and Exchange…

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SEC Charges Trucking Executives With Accounting Fraud

The SEC’s complaint against former Celadon president and chief operating officer William Eric Meek and former chief financial officer Bobby Peavler alleges that they sought to conceal losses by engaging in a scheme to buy and sell trucks at inflated prices, in some cases double or triple their fair market value. The complaint alleges that as a result of the transactions with third-party…

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SEC Charges Iconix Brand Group and Former Top Executives With Accounting Fraud

The SEC’s complaint against former Iconix CEO Neil Cole and former Chief Operating Officer Seth Horowitz alleges that Cole and Horowitz devised a fraudulent scheme to create fictitious revenue, allowing Iconix to meet or beat Wall Street analysts’ consensus estimates in the second and third quarters of 2014. According to the complaint, Cole and Horowitz realized substantial profits on Iconix…

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