SEC Charges BorgWarner for Materially Misstating its Financial Statements

SEC

The Securities and Exchange Commission today announced settled charges against BorgWarner Inc., a motor vehicle parts manufacturer headquartered in Auburn Hills, Michigan, for materially misstating its financial statements by failing to account for certain asbestos liabilities.

The SEC’s order finds that from 2012 to 2016, BorgWarner failed to report over $700 million in liabilities associated with future asbestos claims. According to the SEC’s order, BorgWarner did not conduct any substantive quantitative analysis to estimate these asbestos claims, despite possessing nearly 40 years of historical raw claims data. read more »

Catching fraud saves taxpayer money

Arkansas Democrat-Gazette

The secretive nature of fraud makes it difficult to detect with much speed. More often than not, it is caught long after the damage has already been done. A 2020 "Report to the Nations" by the Association of Certified Fraud Examiners (ACFE) estimates that the typical time between when a fraud begins and when it is detected is 14 months.

According to the ACFE report, tips from whistle-blowers account for 43 percent of the initial detection of occupational fraud. Thus, in addition to audits, it is important to incentivize people to report fraud. According to the National Whistleblower Center, between 2007 and 2019 the IRS has been able to recover $5.7 billion while awarding nearly $932 million through the IRS Whistleblower Reward Program. The program rewards whistle-blowers 15 percent to 30 percent of proceeds from tax fraud or tax underpayments. read more »

SEC Charges Super Micro and Former CFO in Connection with Widespread Accounting Violations

SEC

The Securities and Exchange Commission today charged Super Micro Computer, Inc., a producer of computer servers, and its former CFO, Howard Hideshima, with prematurely recognizing revenue and understating expenses over a period of at least three years.

"Reporting revenue in the wrong period gives investors a distorted view of a company's financial condition" said Melissa Hodgman, an Associate Director in the SEC's Division of Enforcement.  "The SEC will continue to hold executives accountable when they exploit insufficient internal controls." read more »