|
 |
| 2003
News and Press Releases |
|
|
HEADLINE:
SEC Settles With Ex-Andersen Partner In Sunbeam Probe
By: Staff Writer
Lafferty Publications Limited, The Accountant. February 18, 2003
_________________________________________________________________________
EXCERPT: THE CHIEF US financial regulator has dropped fraud charges against Arthur Andersen partner Phillip Harlow in connection with his audit work related to the Sunbeam scandal. The regulator allowed Harlow to settle charges of improper professional conduct without admitting or denying guilt. At a time when the financial regulators are aiming to get tough with the "financial gatekeepers" of companies - such as accountants, lawyers and investment bankers - Harlow could be considered a lucky man. The Securities and Exchange Commission (SEC) had claimed Harlow failed to exercise "professional scepticism" when performing audits for Sunbeam's 1996 and 1997 year-end financial statements, resulting in audit reports that falsely stated the statements conformed to generally accepted accounting principles (GAAP). Under the settlement, Harlow is barred from working as an accountant for the time being. He has the right to apply for reinstatement after three years. Meanwhile, Sunbeam's former chief financial officer, Robert Gluck, and a former executive vice president, Donald Uzzi, were also allowed to settle SEC charges that they created sham transactions, improperly recognised revenue and improperly recorded reserves. Without admitting or denying wrongdoing, they agreed not to engage in any securities law violations in the future and agreed to pay fines of $100,000 each. Gluck will not be able to serve as an officer of any public company for five years. While Harlow was not accused of conspiring with Sunbeam managers, the SEC said Harlow accepted uncorroborated financial results. "He should have known better," said assistant SEC enforcement director Thomas Newkirk. "He missed a lot of red flags that should have told him that the company was behaving improperly." Sunbeam's accounting reached scandal proportions after it was revealed that Sunbeam had manipulated its results in 1996 and 1997. In 1996, the company recorded total restructuring charges of $338 million, of which $19 million was improper under GAAP. This was because they benefited Sunbeam's future operations and resulted in the overstatement of the company's income in 1997. In 1997, Sunbeam manipulated its results through improper revenue recognition.
|
|
|
