Mattel Inc. Barbie dolls go on sale at a Walmart Inc. store in Burbank, California, U.S., Tuesday, Nov. 26, 2019. A PWC survey shows 36% of consumers surveyed plan to shop on Black Friday. The offers will ultimately dictate where the spending and visits go.
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toy maker Mattel agreed to pay a $3.5 million fine to settle charges related to inaccuracies in two quarters of earnings in 2017, the Securities and Exchange Commission said Friday.
The SEC said Mattel “violated numerous professional standards” by understating its tax assessment for the third quarter of 2017 by $109 million. The company then overstated its tax liability in the fourth quarter of this year by the same amount, according to the SEC order.
The commission is separately pursuing enforcement action against a former auditor of PricewaterhouseCoopers, an international tax consultancy, who oversaw the work.
“Adherence to professional standards and the independence of an auditor are essential to maintaining investor confidence in a company’s financial statements,” Alka Patel, associate director of the SEC’s Los Angeles regional office, said in a statement. a statement. “Auditors who advise their clients on who to hire will have a stake in the success of those hires and may therefore be less critical of their effectiveness, which undermines auditor independence.”
The SEC said Mattel neither admitted nor denied the findings of its investigation. Mattel did not immediately respond to a request for comment.
As a result, the company misreported its quarterly losses.
The fine relates to an SEC investigation that ended in 2019. Mattel’s $109 million tax charge error was not corrected until it was restated in November 2019.
Mattel’s chief financial officer announced that he would step down that year.
Joshua Abrahams, who is identified in the report as the PwC auditor involved, was aware of the error but did not share it with Mattel’s audit committee. Abrahams also provided limited human resources advice to Mattel.
The SEC will hold a public hearing into Abrahams’ actions.