It’s that time of year again. The mercury is soaring, and people are on summer vacation. While your vacation reading may be the latest bestseller novel, I’m catching up on reviewing recent Accounting and Enforcement Releases (AAERs) issued by the Securities and Exchange Commission.

As in prior years, there are plenty of interesting cases to talk about. Over the twelve months ended June 30, 2016, the SEC issued almost 120 AAERs. While many of these deal with improper professional conduct by auditors of public companies, there were also a significant number of enforcement actions against companies and their executives and even a rare case against an audit committee chair. Common aspects of accounting and reporting involved in these enforcement actions included improper and fraudulent revenue recognition, issues relating to valuation and impairment of assets, earnings management, related-party transactions, missing or inadequate disclosures, and various cases involving deficiencies in internal controls and violations of the provisions of the Foreign Corrupt Practices Act (FCPA) relating to payments to foreign government officials and to maintaining proper books and records.

Over the years there have been scores of AAERs dealing with instances of improper and fraudulent revenue recognition, often involving what appear to be very simple and brash attempts to falsify reported revenues and earnings to meet analyst expectations. In September 2015, Bankrate Inc. agreed to pay $15 million to settle an enforcement action relating to booking fraudulent revenues and understating expenses in the second quarter of 2012. As part of this case, the then-VP of finance agreed to pay more than $180,000 to settle charges against him; the SEC is also pursuing charges against Bankrate’s former CFO and director of finance. According to the SEC, upon learning that the company’s preliminary financial results for the second quarter of 2012 fell short of analysts’ estimates, the CFO directed others across various divisions of the company to artificially book fictitious revenues and improperly reduce certain expenses. The SEC also alleges that the executives lied to the company’s auditors and that when Bankrate’s stock rose after it announced the inflated financial results for the second quarter of 2012, the CFO sold more than $2 million of his shares in the company.

Statements by senior SEC officials make it clear that we are likely to see a continued focus by the Commission on enforcement actions against companies and individuals relating to improper accounting and reporting.

In September 2015, the SEC also settled an enforcement case against Trinity Capital Corp., its wholly-owned subsidiary Los Alamos Bank, and Trinity’s former CEO, CFO, and VP of internal audit in connection with a series of actions designed to understate the provisions for loan and lease losses during 2010, 2011, and the first two quarters of 2012, resulting in gross overstatements of income reported shareholders and regulators. For example, the SEC alleged that for 2011, Trinity understated its reported loss available to common shareholders by $30.5 million, reporting net income of $4.9 million instead of a loss of $25.6 million. According to the SEC, the alleged fraud was motivated, at least in part, by the desire to be released from a formal supervisory agreement with the bank’s primary regulator, the Office of the Comptroller of the Currency. As part of the settlement, Trinity agreed to pay $1.5 million and the CEO agreed to pay $250,000 and be barred for five years from serving as an officer or director of a public company. The former CFO and former VP of internal audit consented to charges of books and records, reporting, and internal controls violations and agreed to cooperate with the SEC in its continuing enforcement actions against Trinity’s former chief credit officer and former senior lending officer.

In recent years SEC officials have repeatedly emphasized the importance of maintaining proper internal control over financial reporting (ICFR). In March 2016, the SEC settled charges against oil company Magnum Hunter Resources (MHR) and several individuals, including the former CFO, the former chief accounting officer, and a consultant to the company for failing to properly evaluate, conclude, and report to the public the existence of a material weakness in the company’s ICFR. Rapid growth of the company during 2010 and 2011, including significant acquisitions, strained its accounting resources and its ability to maintain effective controls over financial reporting. While the external consultant hired to document and test MHR’s ICFR identified problems in the company’s accounting capabilities that were resulting in reporting delays, he concluded that these did not rise to the level of a material weakness. The SEC charged the CFO and the chief accounting officer for improperly relying on the consultant’s conclusion and it also sanctioned the engagement partner who conducted the independent audit of MHR’s ICFR for failure to properly apply the relevant auditing standards.

A number of enforcement actions involve related-party transactions. For example, In October 2015, the SEC charged Cayman Islands-based Home Loan Servicing Solutions (HLSS) with making material misstatements about and having inadequate internal controls over related-party transactions and the resulting improper valuation of the company’s primary asset, its mortgage servicing rights, and misstatement of its net income for 2012, 2013, and the first quarter of 2014. These related-party transactions included the purchase of the billions of dollars of mortgage servicing rights from Ocwen Financial Corp., whose chairman also served as the chairman of HLSS. HLSS agreed to pay $1.5 million to settle the charges. Additionally, the SEC also charged Ocwen with misstating its financial results for the last three quarters of 2013 and the first quarter of 2014 by improperly valuing its mortgage servicing rights by relying on the flawed methodology used by HLSS to value such assets. In January 2016, Ocwen agreed to pay $2 million to settle these charges.

Thus far, the cases I have described have not involved major public companies. But they are by no means immune form SEC enforcement actions. Not surprisingly, these often involve FCPA violations. For example, in August 2015, the Bank of New York Mellon Corporation (BNY Mellon) agreed to pay $14.8 million to settle charges that in 2010 and 2011 it violated the FCPA by improperly providing student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund. According to the SEC, officials of the sovereign wealth fund repeatedly asked BNY Mellon to provide their family members with internships and that in order to keep the sovereign wealth fund’s business, BNY Mellon bypassed its normal stringent evaluation process and hiring standards for internships. In March 2016, without admitting to or denying the findings, Qualcomm consented to Cease-and-Desist Proceedings relating to alleged violations of the anti-bribery, books and records, and internal control provisions of the FCPA. Among other violations of the FCPA, the SEC alleged that from 2002 until 2012 Qualcomm provided things of value to Chinese government officials involved in making regulatory decisions regarding the use of Qualcomm’s technologies in China.

The SEC has also pursued enforcement actions against major foreign registrants for FCPA violations. For example, in February 2016, German-based SAP SE agreed to pay nearly $3.9 million to settle charges relating to bribing Panamanian officials to gain sales contracts. The SEC also charged the SAP official that it alleged orchestrated the bribery scheme and obtained payments of over $90,000 from him to settle the matter. In March 2016, Swiss-based Novartis AG agreed to pay $25 million to settle charges by the SEC in connection with payments and other things of value provided by Novartis employees and agents to Chinese healthcare providers and for concealing the true nature of the payments in the company’s books and records.

As evidenced by most of the enforcement actions discussed above, the SEC continues to charge not only companies in enforcement actions, but also the senior officials and company executives involved in the case. Moreover, as part of its “Operation Broken Gate” that the SEC initiated in 2013, there has been heightened focus on holding auditors and directors responsible for improper accounting and financial reporting. Thus, since 2014 there have been several actions that included charges against audit committee chairs. For example, in September 2015, the SEC announced the settlement of charges against various individuals, including the former chair of the audit committee of MusclePharm Corp., for omitting to disclose in public filings or understating nearly $500,000 of perks bestowed on company executives. The SEC alleged that the audit committee chair was well aware of these matters, but failed to ensure that the company properly disclosed the executive perks.

While each of the above described cases has its own particular facts and circumstances, statements by senior SEC officials make it clear that we are likely to see a continued focus by the Commission on enforcement actions against companies and individuals relating to improper accounting and reporting.

Topics