Mattel’s chief financial officer is leaving the US toymaker in the wake of a investigation into the firm’s accounting errors and subsequent breaches of auditor independence rules.
The toy company has maintained that CFO Joseph Euteneuer’s departure is not to blame for the accounting problems, but that the six-month transition plan was one of the steps it was taking in response to the investigation’s findings.
It’s also stated that the investigation had ‘no impact on Mattel’s full year financial results for 2017 or subsequent periods.”
Conducted by the board’s audit committee with an outside law firm and forensic accountants, the investigation found errors in Mattel’s publicly disclosed financial statements, specifically income tax expenses that had been understated by $109m in Q3 2017.
There was found to be no impact on the company’s full year accounts, since expenses had been overstated by the same amount in Q4 of 2017.
The investigation did however determine that Mattel had “certain material weaknesses in its internal control over financial reporting and that it identified “lapses in judgement by management” but “did not find that management engaged in fraud.”
Mattel said the error was not reported to its then CEO Margaret Georgiadis. The issue was only uncovered after an anonymous whistleblower sent a letter in August to PwC, raising concerns about accounting errors and questioning whether the audit firm was independent.
The audit committee’s investigation also found “violation of the SEC’s auditor independence rules,” when it found that PwC had recommended candidates for senior finance positions at Mattel.
However, both Mattel and PwC have stated that the impartiality of Mattel’s outside auditor had “not been impaired” and that many of the whistleblower’s allegations were unfounded.
Mattel is now searching for a successor to CFO Euteneuer and added that it had already made other personnel changes, including hiring a new controller and a new senior vice president of tax.