The Securities and Exchange Commission this week announced financial fraud cases against a pair of companies and their former executives accused of various accounting failures that left investors without accurate depictions of company finances.

In one case, technology manufacturer Logitech International agreed to pay a $7.5 million penalty for fraudulently inflating its fiscal year 2011 financial results to meet earnings guidance and committing other accounting-related violations during a five-year period.  Logitech’s then-controller Michael Doktorczyk and then-director of accounting Sherralyn Bolles agreed to pay penalties of $50,000 and $25,000, respectively, for violations related to Logitech’s warranty accrual accounting and failure to amortize intangibles from an earlier acquisition. 

The SEC filed a complaint in federal court on April 18, 2016, against Logitech’s then-chief financial officer Erik Bardman and then-acting controller Jennifer Wolf alleging that they deliberately minimized the write-down of millions of dollars of excess component parts for a product for which Logitech had excess inventory in FY11.  For Logitech’s financial statements, the two executives falsely assumed the company would build all of the components into finished products despite their knowledge of contrary facts and events. 

In the other case, three former executives at battery manufacturer Ener1 agreed to pay penalties for the company’s materially overstated revenues and assets for year-end 2010 and overstated assets in the first quarter of 2011. The financial misstatements were the result of management’s failure to impair investments and receivables related to an electric car manufacturer that was one of its largest customers, according to the SEC. 

Former CEO and chairman of the board, Charles Gassenheimer, agreed to the highest penalty of $100,000. Former CFO, Jeffrey Seidel, and former chief accounting officer, Robert Kamischke, agreed to pay penalties of $50,000 and $30,000, respectively.

“We are intensely focused on whether companies and their officers evaluate judgmental accounting issues in good faith and based on GAAP,” Andrew Ceresney, director of the SEC’s Division of Enforcement, said in a statement. “In these two cases, we allege deficiencies in Ener1’s failure to properly impair assets on its balance sheet and Logitech’s failure to write down the value of its inventory to avoid the financial consequences of disappointing sales.”

In the Ener1 case, the SEC also found that Robert Hesselgesser, the engagement partner for PwC’s audit of Ener1’s 2010 financial statements, violated PCAOB and professional auditing standards when he failed to perform sufficient procedures to support his audit conclusions that Ener1 management had appropriately accounted for its assets and revenues. Hesselgesser agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC’s order permits Hesselgesser to apply for reinstatement after two years.

“Auditors play a critical role regarding the accuracy of financial statements relied upon by investors, and they must be held accountable when they fail to do everything required under professional auditing standards,” Michael Maloney, chief accountant of the SEC’s Division of Enforcement said in a statement.

In the Logitech case, former CEO Gerald Quindlen was not accused of any misconduct, but has returned $194,487 in incentive-based compensation and stock sale profits received during the period of accounting violations, pursuant to Section 304(a) of the Sarbanes-Oxley Act.

The companies and executives who agreed to settlements neither admitted nor denied the charges.