Washington D.C.--(Newsfile Corp. - December 20, 2024) - The Securities and Exchange Commission today announced that Entergy Corporation, a Louisiana-based utility company, agreed to pay a $12 million civil penalty to settle charges that it failed to maintain internal accounting controls to ensure that its surplus materials and supplies were accurately recorded in its books and financial statements in accordance with generally accepted accounting principles (GAAP).
According to the SEC's complaint, filed in the U.S. District Court for the District of Columbia, from at least mid-2018 to the present, Entergy included materials and supplies at their average cost as an asset on its balance sheets. However, during this time, Entergy had allegedly been informed by its employees and management consultants that this asset included a substantial amount of potential surplus, including aged materials and supplies in excess of Entergy's anticipated future use or exceeding the maximum stocking levels deemed necessary by its business units. According to the complaint, Entergy failed to establish a comprehensive process to review these materials and supplies to identify surplus, remeasure it, and record any differences between its average cost and remeasured cost as an expense, in accordance with GAAP.
"Internal accounting controls serve as a front-line defense in ensuring the accuracy and reliability of financial statements," said Sanjay Wadhwa, Acting Director of the SEC's Division of Enforcement. "Investors rely on public companies, such as Entergy, to ensure that adequate internal accounting controls are in place. We allege that Entergy failed to fulfill its obligation in this regard."
Without admitting or denying the allegations in the SEC's complaint, Entergy consented to the entry of a final judgment, subject to court approval, which includes being permanently enjoined from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, paying the $12 million civil penalty referenced above, and adopting an independent consultant's recommended improvements to its internal accounting controls.
The SEC's investigation was conducted by Ada Fernandez Johnson, Katherine H. Stella, and Brian Palechek under the supervision of Lisa Deitch, Peter Rosario, Ryan Wolfe, and Stacy Bogert, with the assistance of Carina Cuellar and Christopher Bruckmann.
