Bank Fined for Internal Accounting Control Deficiencies

A Canadian chartered bank settled charges with the SEC for accounting control deficiencies that affected the cost capitalization accounting on the bank's internally developed software.

In an Order, the SEC found that the bank's internal accounting controls were insufficient to identify indicators of impairment. As a result, the SEC said that the bank carried capitalized software assets on its balance sheets when they should have been impaired or amortized over their useful life. As a result, the SEC concluded that the bank violated Exchange Act Section 13(b)(2)(A) and (B) ("Periodical and other reports").

To settle the charges, the bank agreed to (i) cease and desist from further regulatory violations and (ii) pay a civil money penalty of $6,000,000.