FMC Technologies Inc and two of its former Controllers settled charges with the SEC, that it overstated profits in one of its business segments. The reason for the overstatement- to meet internal targets, the method of overstatement- improper adjustments and adjustments outside of an accounting period.
Two of the company’s controllers first improperly reduced the company’s liability associated with employee paid time off leading to overstatement of operating profit by $800K. They also corrected an error worth $730K recorded in 2012, in Q1 2013 without notifying the top controller. Do note that they later also signed a letter in which they said that we did not book any out of period adjustments over $250K! Apart from these entries, the company also made an out of period adjustment of $8 million for interest income in 2014.
The penalty for the company- the company will pay $2.5 million to the SEC, the two execs will pay $30K and $10K respectively and will be suspended from working on SEC related accounting matters (though they can apply for restatement after 2 years). Question is should they be allowed to?
