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Sarbanes-Oxley News & Developments
SEC Settles Charges with Former ControllerThe SEC settled civil charges against Gregory L.English, former corporate controller of NCI Building Systems, Inc.
> > The complaint alleges that NCI overstated net earnings by $1.3 million during the third and fourth quarters of 1999, $7.5 million in 2000, and $1.2 million for the first quarter of fiscal 2001.
The company issued restated financials on June 8, 2001. The SEC alledged a number of accounting errors which resulted in material misstatement of company financial statements.The errors resulted primarily from NCI to fail to update standard costs and scrap-metal factors following migration to a new management information system (MIS) in May 1999, and from failed attempts by NCI accounting personnel to manually correct for MIS problems in a key inventory liability account.
The SEC charged, English proceeded to authorize an erroneous $2.6 million entry dispite an accounting employee informing English of $2.6 million on the books resulting in an increase in recorded book inventory. As corporate controller for NCI, English knew, or was reckless in not knowing, that the inventory overstatement would have a material effect on the financial statements for NCI. In addition, English knew or should have known errors with the new MSI system and failed to correct them.
Without admitting or denying the allegations, English agreed to pay a $25,000 penalty and to not serve as an officer or director of a public company for five (5) years.
Source: CFO
Published:2003-10-16
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