SEC Issues Order Accepting Settlement Offer of CPA and Former CFO; Commissioner Aguilar Dissents

The SEC issued an order accepting the settlement offer of a Certified Public Accountant ("CPA") and a former Chief Financial Officer ("CFO") of Affiliated Computer Services, Inc. ("ACS").

According to the SEC, in 2008 and 2009, ACS arranged for an equipment manufacturer to redirect some of its preexisting orders through ACS, giving the appearance that ACS was involved when, in reality, ACS had no substantive involvement. Therefore, the SEC states, ACS should not have reported revenue from these arrangements nor misreported revenues in its financial reports for these periods.

Subsequently, ACS falsely reported its internal growth, which the CPA and CFO of the company highlighted in earnings releases and analyst conference calls during the period. The CPA and CFO additionally received bonuses that were higher than they would have been had ACS not reported these redirected orders. The SEC states that the CPA and CFO were a cause of the ACS's violations of the reporting, recordkeeping and internal controls provisions of the Exchange Act.

The CPA and CFO submitted an offer of settlement for the charges, which the SEC accepted.

SEC Commissioner Luis A. Aguilar submitted a statement of dissent regarding the SEC's acceptance of the settlement offer, stating that the settlement "is a wrist slap at best," given the "egregious conduct" in which the CFO engaged. Commissioner Aguilar stated that, beyond this particular matter, he is concerned "that the Commission is entering into a practice of accepting settlements without appropriately charging fraud and imposing Rule 102(e) suspensions against accountants in financial reporting and disclosure cases."