Tom Sporkin Quoted in Compliance Week Article, "SEC Fines Energy Company $300K Over Rubber Stamp Internal Controls"
March 29, 2016
Tom Sporkin was quoted in Tammy Whitehouse's Compliance Week article, "SEC Fines Energy Company $300K Over Rubber Stamp Internal Controls," on March 29, 2016.
A signature alone is not convincing evidence of much of anything, in the eyes of audit and financial reporting regulators lately. The Securities and Exchange Commission delivered that message once again with a recent enforcement action that gives public company executives yet another reminder that internal controls represent more than a checklist compliance exercise.
The Securities and Exchange Commission took action against Texas-based energy company Magnum Hunter Resources Corporation, including its chief financial officer and chief accounting officer, as well as an external auditor and a consultant, for improperly concluding that a serious staffing problem in the accounting department did not rise to the level of a material weakness in internal control. The action does not include any allegations of accounting anomalies that arose during the reporting periods in question, although the company eventually went on to restate its financial results and declare bankruptcy.
“This is a case that doesn’t have a punchline,” says Tom Sporkin, a partner with law firm BuckleySandler. “It should be very insightful that charging internal controls only is no longer off limits for the SEC.”