SEC Charges Utility Company Entergy Corp. with Internal Accounting Controls Violations
summary
Entergy Corporation settled SEC charges for failing to maintain internal accounting controls for surplus materials, resulting in a $12 million civil penalty.
paragraph
Entergy Corporation agreed to pay a $12 million civil penalty to settle SEC charges regarding failures in its internal accounting controls. The company allegedly failed to accurately record surplus materials and supplies in accordance with GAAP from mid-2018 onward. The settlement includes a permanent injunction against violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.
narrative
Entergy Corporation, a Louisiana-based utility company, settled SEC charges for failing to maintain adequate internal accounting controls to accurately value surplus materials and supplies. From mid-2018, the company allegedly failed to account for aged or excess inventory despite being informed by employees and consultants of substantial surplus. This failure resulted in assets being recorded at average cost rather than remeasured costs, violating GAAP. To resolve the matter, Entergy agreed to pay a $12 million civil penalty and implement improvements recommended by an independent consultant. The settlement, filed in the U.S. District Court for the District of Columbia, also includes a permanent injunction against violating specific sections of the Securities Exchange Act of 1934. Entergy consented to this judgment without admitting or denying the allegations.
Classified accounting-fraud(confidence 99%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →
Statutes
Parties
ada fernandez johnsonentergy corporationinternal accounting controlsSanjay Wadhwasec investigationSecurities and Exchange Commission
Keywords
internal accountingaccounting controlsentergyaccountingmaterials suppliesinternalcontrolsutility companysecmaterialssuppliescompany entergyentergy corpcorp internalsecurities exchange
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 1
- $12.00M $12 million $10M–$100M
Entities 6
- person ada fernandez johnson
- company entergy corporation
- person internal accounting controls
- person Sanjay Wadhwa
- agency sec investigation
- agency Securities and Exchange Commission
Triples 8
- Entergy Corporation agreed to pay $12 Million Civil Penalty
- Entergy Corporation failed to maintain Internal Accounting Controls
- Entergy included Materials and Supplies at Average Cost
- Entergy failed to establish Comprehensive Process to Review Materials
- Sanjay Wadhwa said Internal Accounting Controls Serve as a Front-Line Defense
- SEC alleges Entergy Failed to Fulfill Obligation
- Entergy consented to Entry of a Final Judgment
- Ada Fernandez Johnson conducted SEC Investigation
PDF (from attached: complaint)
Text layers
Extracted body text (2,338c)
The Securities and Exchange Commission today announced that Entergy Corporation, a Louisiana-based utility company, agreed to pay a $12 million civil penalty to settle charges that it failed to maintain internal accounting controls to ensure that its surplus materials and supplies were accurately recorded in its books and financial statements in accordance with generally accepted accounting principles (GAAP). According to the SEC’s complaint, filed in the U.S. District Court for the District of Columbia, from at least mid-2018 to the present, Entergy included materials and supplies at their average cost as an asset on its balance sheets. However, during this time, Entergy had allegedly been informed by its employees and management consultants that this asset included a substantial amount of potential surplus, including aged materials and supplies in excess of Entergy’s anticipated future use or exceeding the maximum stocking levels deemed necessary by its business units. According to the complaint, Entergy failed to establish a comprehensive process to review these materials and supplies to identify surplus, remeasure it, and record any differences between its average cost and remeasured cost as an expense, in accordance with GAAP. “Internal accounting controls serve as a front-line defense in ensuring the accuracy and reliability of financial statements,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Investors rely on public companies, such as Entergy, to ensure that adequate internal accounting controls are in place. We allege that Entergy failed to fulfill its obligation in this regard.” Without admitting or denying the allegations in the SEC's complaint, Entergy consented to the entry of a final judgment, subject to court approval, which includes being permanently enjoined from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, paying the $12 million civil penalty referenced above, and adopting an independent consultant’s recommended improvements to its internal accounting controls. The SEC's investigation was conducted by Ada Fernandez Johnson, Katherine H. Stella, and Brian Palechek under the supervision of Lisa Deitch, Peter Rosario, Ryan Wolfe, and Stacy Bogert, with the assistance of Carina Cuellar and Christopher Bruckmann.
OCR text (2,338c · html-text · 99% conf)
The Securities and Exchange Commission today announced that Entergy Corporation, a Louisiana-based utility company, agreed to pay a $12 million civil penalty to settle charges that it failed to maintain internal accounting controls to ensure that its surplus materials and supplies were accurately recorded in its books and financial statements in accordance with generally accepted accounting principles (GAAP). According to the SEC’s complaint, filed in the U.S. District Court for the District of Columbia, from at least mid-2018 to the present, Entergy included materials and supplies at their average cost as an asset on its balance sheets. However, during this time, Entergy had allegedly been informed by its employees and management consultants that this asset included a substantial amount of potential surplus, including aged materials and supplies in excess of Entergy’s anticipated future use or exceeding the maximum stocking levels deemed necessary by its business units. According to the complaint, Entergy failed to establish a comprehensive process to review these materials and supplies to identify surplus, remeasure it, and record any differences between its average cost and remeasured cost as an expense, in accordance with GAAP. “Internal accounting controls serve as a front-line defense in ensuring the accuracy and reliability of financial statements,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Investors rely on public companies, such as Entergy, to ensure that adequate internal accounting controls are in place. We allege that Entergy failed to fulfill its obligation in this regard.” Without admitting or denying the allegations in the SEC's complaint, Entergy consented to the entry of a final judgment, subject to court approval, which includes being permanently enjoined from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, paying the $12 million civil penalty referenced above, and adopting an independent consultant’s recommended improvements to its internal accounting controls. The SEC's investigation was conducted by Ada Fernandez Johnson, Katherine H. Stella, and Brian Palechek under the supervision of Lisa Deitch, Peter Rosario, Ryan Wolfe, and Stacy Bogert, with the assistance of Carina Cuellar and Christopher Bruckmann.