Financial Accounting Blog

Tuesday, October 28, 2003

Aiding and Abetting

This goes to show you that the SEC is widening their reach. Not only are they charging the company executives that cook the books, but also any customers that help them do it! In this case, the VP of sales at Logicon helped Legato sales executives improperly record revenues.

The Legato sales executives included a side letter granting Logicon the right to cancel the transaction. But the existance of the side letter was never made aware to the Finance Department who booked the transaction as revenue.

Notice the last paragraph...... as Dennis said in class, the SEC issues an order to "stop doing it", and the CFO says "OK". But it does say "former" CFO........

Laura Luchsinger