Mattel fined $3.5M over accounting misstatements; ex-PwC partner could face discipline
The Securities and Exchange Commission (SEC) fined Mattel $3.5 million for allegedly overstating tax expenses and initiated litigation against a former PwC audit partner accused of failing to inform the toy company’s audit committee about its financial statement errors.
Mattel understated its tax-related valuation allowance regarding its Thomas the Tank Engine asset by $109 million in the third quarter of 2017 before overstating the tax expense by $109 million in the fourth quarter of 2017, the SEC explained in its order published Friday. As a result, Mattel understated its net loss and net loss per share in the third quarter by 15 percent, and it overstated those figures in the fourth quarter by 63 percent, the agency said.
Mattel learned of the matter when it received a whistleblower letter in August 2019 alleging the errors and raising questions about the independence of Joshua Abrahams, who at the time was Mattel’s lead engagement partner at PwC.