Computer Sciences Corp. (CSC) disclosed in a securities filing yesterday that it has reached a $190 million proposed settlement with the Securities and Exchange Commission and will restate three years of financial results to resolve accounting issues dating back four years ago.
The SEC charged the IT services company with violating the anti-fraud, reporting, and books-and-records provisions of U.S. securities laws. CSC neither admitted nor denied the allegations but did agree to cease-and-desist from committing or causing any future violations or securities laws, the company stated in a Form 8-K, dated Dec. 29.
In 2011, the SEC’s Division of Enforcement launched a formal investigation into CSC concerning accounting irregularities at its businesses in the Nordic region. The audit committee began an independent investigation of its own, and found additional accounting irregularities in Australia, and concerning CSC’s contractual relationship with the U.K. National Health Service.
CSC self-reported these errors and irregularities to the SEC and made adjustments to its financial statements related to prior periods as reported in its past filings.
As a result of findings from the audit committee’s independent investigation, certain personnel in certain foreign operations were reprimanded, suspended, terminated, or resigned, the company stated. Additionally, CSC said it made enhancements to its compliance, financial and disclosure controls, as well as to its internal audit function, beginning in 2011.
Specifically, CSC said it enhanced its compliance culture and remediated any deficiencies through:
Company-wide communications concerning it key organizational values of ethics, compliance and integrity; Strengthening internal controls and processes to further ensure the accuracy and integrity of its financial reporting; Improving technical training for employees in finance and accounting roles;
Restructuring its internal audit group and the outsourcing of many internal audit activities to Ernst & Young to enhance the quality and scalability of the company’s overall internal audit function; and
Creating an independent investigations unit to investigate suspected violations of the law or Code of Conduct.
Furthermore, CSC elevated it role of the chief compliance and ethics officer to provide direct reporting to the audit committee. It also created the newly-established role of chief accounting officer, responsible for developing accounting policies and reviewing complex technical accounting issues.
Additionally, CSC will restate its financial results for fiscal year 2012, as well as summary financial results for fiscal years 2010 and 2011.