The Financial Reporting Council fined Ernst & Young £1.8 million for their shoddy audit work of distributor Tech Data.
This is what happened. In 2013, Tech Data revealed that there were material errors in their financials for 2011, 2012 and part of 2013. The errors were related to improper accounting of vendor sales, improper use of manual journal entries and incorrect recognition of forex currency conversion. The company’s bottom line was reduced by $27 million due to these errors.
After Tech Data’s revelation, FRC got into action and in 2014 started to look into Tech Data’s auditor E&Y’s role in the matter. Both E&Y and the audit engagement partner Julian Gray admitted that they messed up and were fined £1.8m and £90K respectively.
A few month’s ago UK’s Financial Reporting Council (FRC) levied the then largest ever penalty on PWC, for 5 Million Pounds, related to misconduct over its audit of Connaught Plc, a FTSE 250 company that went into administration in 2010.
Now PWC is fined 5.1 Million pounds related to misconduct over its audit of RSM Tenon Group Plc., a professional services firm that went into administration in 2013.
FRC is also investigating PWC’s audit of the BT Group Plc following an accounting scandal in the carrier’s Italian unit.
Definitely a record breaking year for PWC, definitely not the kind the firm is looking for.
Alere, a Waltham based diagnostic firm, agreed to pay $13 million to the Securities and Exchange Commission (SEC), to settle charges that it committed accounting fraud. The charges state that the company, through its subsidiary in South Korea inflated their revenue by recognizing revenue for products that were still being stored in the company’s warehouse or otherwise not delivered to the customer.
Another charge on the company is that the company’s subsidiaries in India and Colombo obtained or retained business by making improper payments/bribing government officials in those countries. The company failed to maintain adequate internal controls to prevent such payments and the company also inaccurately recorded the payments in its books.
The company neither admitted nor denied the findings but has agreed to pay $13 million, out of which $9.2 million is the penalty amount.
The question though is, isn’t the fact that they are paying the SEC accepting guilt?