Stay informed with free updates
Simply sign up to the Accountancy myFT Digest — delivered directly to your inbox.
The number of large US companies missing deadlines to file their annual reports has jumped this year, leaving investors in the dark as executives and their auditors wrestle with accounting problems and weaknesses in their financial controls.
The annual rush to sign off on financial statements has this week exposed issues at companies ranging from the chemicals giant Chemours to the toymaker Mattel.
Chemours, the maker of Teflon, put its chief executive and two most senior finance executives on administrative leave on Thursday while it investigates financial practices that may have affected executive bonuses.
The agricultural products group Archer Daniels Midland, which put its chief financial officer on leave in January while it investigated accounting practices at its food ingredients business, said on Friday that it could take another two weeks to finalise its audited figures for 2023.
Shares in New York Community Bancorp were meanwhile down by a quarter on Friday after the regional lender delayed its annual report, saying it had found material weaknesses in the internal controls that guide how it reviews loans.
Mattel, the toy company, said on Thursday that it had also found weaknesses in its internal controls over financial reporting, and that it would need more time to get its annual report out.
According to the data provider AlphaSense, 16 companies with market capitalisations over $1bn have said so far this year that they would miss deadlines to file annual reports, which is 60 days after the financial year-end for large companies. That is almost double the number from last year, when nine companies said they needed extra time.
The auditors of large US companies are required not just to sign off on the annual figures themselves but also on the internal controls and systems that a company used to produce them. Regulators require that weaknesses in those controls are prominently flagged to investors.
Chemours said it was examining “one or more” potential material weaknesses in its internal controls, and a series of other issues including how whistleblower complaints are handled and whether senior executives had set the right “tone at the top”.
As well as chief executive Mark Newman, the company placed chief financial officer Jonathan Lock and controller Camela Wisel on leave.
Chemours, which was spun out of Dupont in 2015, said it was examining how working capital was managed, and how that affected financial metrics on which executive bonuses were based. Its shares slumped 32 per cent on the news, wiping $1.4bn from its market value. In afternoon trading on Friday, they were up 2.8 per cent on the day but still 30 per cent below Wednesday’s level.
Read the full article here
