Grainy accounting at Cargill

Diane Backis, an accounting manager at Cargill caused the company a loss of at least $25 million and stole more than $3.1 million from the company over a period of 10 years. She pleaded guilty to charges of mail fraud and false tax filings. She has agreed to pay Cargill $3.5 million, forfeit her home, give up her investment brokerage account and her Cargill pension. For the guilty charges she could also be imprisoned for up to 11 years.

What did she do? Well, Backis did quite a few accounting fraud tactics to enrich herself. Her job was to create customer contracts, generate and mail invoices, receive and process payments from customers. She would create and send fraudulent invoices with significantly discounted prices (reducing the company’s revenue), then ask the customers to send money to her office location instead of directly to the company’s financial institution, which was the required process, she would then deposit these checks in her personal account. To cover it all, she would book incorrect entries in the books and reverse those in a later month. Similarly, she would misapply the payments in wrong customer accounts, which made it look like various customers owed Cargill money, but then later she would go and reverse those entries. Her accounting scheme was so detailed that she was able to go unnoticed for over a decade.

SEC to get a new Chief Accountant

Wesley R. Bricker to take over as Chief Accountant of the US SEC after the retirement of the current Chief Accountant James Schnurr.

Weatherford update

Weatherford International announced the sudden exit of it’s CEO Bernard Duroc- Danner. The move though sudden is not unexpected. Recently the company settled with SEC on deceptive accounting charges. The company had overstated its results to meet its earlier announced projections and analyst’s expectation.

In light of that, it would make sense for the company’s CEO to leave, wouldn’t it?