Firm Settles SEC Charges For Accounting, Reporting And Control Failures

A firm and its former CEO settled SEC charges for accounting, reporting and internal control failures that resulted in a multi-year restatement of its financial statements. According to the Order, the firm's inventory tracking system, which populated the firm's financial statements, did not properly maintain historical cost information for its inventory. The SEC found that the CEO and other personnel at the firm were aware of the problem but did not take any remedial action, including failing to:

• fix the inventory tracking system;
• design and maintain accounting controls to ensure compliance with GAAP; and
• design, maintain and evaluate the effectiveness of disclosure controls and procedures and internal control over financial reporting.