internal control

Talk about going on a bender: the SEC just fined spirits maker Diageo $5 million for forcing its distributors to buy more liquor than they needed, and then neglecting to tell investors that Diageo’s inflated sales numbers would eventually dry out.  In the world of funny numbers, what Diageo did is known as channel stuffing,…

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ericsson

As everyone in the corporate compliance world knows by now, Ericsson settled its long-running FCPA case last week with $1.06 billion in disgorgement and penalties plus a compliance monitor to boot. This is a sprawling case, full of lessons for the rest of us, so let’s start with the internal controls issues enforced by the…

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management override

Keeping pace with all the ethics and compliance lessons one can learn from the Trump Administration is no easy task. Nevertheless, we have yet another one: the perils of management override, as demonstrated by President Trump’s determination to keep a disgraced Navy SEAL in military service. The story evolved quickly over the weekend. It begins…

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CAMs

Earlier this fall large corporations started to file annual reports that, for the first time ever, included “critical audit matters” identified by their audit firms. CAMs have been a controversial idea for quite some time, but they’re here — and now we have some early research on which subjects audit firms are flagging for CAM…

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lessons

You may have seen news last week that a Swiss bank, LLB Verwaltung, paid $10.7 million to the Justice Department to settle charges of tax evasion. The deal is notable because the bank’s compliance officer had warned senior executives about the risks they were taking — warnings that senior bank executives chose to ignore. So…

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lease

Confession: I love the new accounting standard for companies to report their costs for leases. Not so much because I applaud what the standard tries to accomplish (although I support that too) but rather, because implementation of the standard demonstrates so many compliance and internal control headaches today. Hear me out. The new standard —…

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Microsoft has agreed to pay $25.3 million to settle FCPA charges against subsidiaries in Hungary, Saudi Arabia, Thailand, and Turkey — the latest in a long line of cases where poor procedures to document sales discounts offered by local resellers paved the way for bribery of foreign government officials.  Microsoft will pay $16.5 million to…

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controls

Last week I had a post about an SEC enforcement action against rent-to-own retailer Conn’s, where the SEC dinged Conn’s for using manually updated forecasting tools to estimate customer credit risk. Executives had low-balled their estimates for years, until that short-sighted maneuver finally forced the company to cut earnings and the share price tanked. Today…

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Oh, look. Another accounting enforcement action from the SEC, where poorly designed internal controls led to management’s abuse of estimates. Everyone put on your shocked face.  The SEC settled a case on Monday with Conn’s, a rent-to-own retailer based in Texas with $1.55 billion in annual sales. Conn’s agreed to pay $1.1 million in a…

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Sacramento Kings

Talk about a flagrant foul: The former chief revenue officer for the Sacramento Kings was sentenced Monday to seven years in federal prison, for duping some of California’s largest businesses into wiring $13.4 million to bank accounts he secretly controlled so he could buy beachfront homes on the California coast. Jeffrey David worked as the…

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