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helped collect the payments from McCallum and assisted in the transactions through which McCallum was repaid.  Stockman, McCallum, Stepp, and Jones knew, or were reckless in not knowing, that the McCallum payments were actually improper round-trip transactions intended to inflate C&A's earnings and that the false earnings figures would materially affect C&A's financial statements and the reports and registration statements C&A filed with the SEC.   Further, during an investigation by C&A's Audit Committee in 2003, Stockman, Stepp, McCallum and Jones continued to conceal the true nature of the McCallum transactions.  McCallum made false statements to the Audit Committee and signed a false or misleading representation letter regarding his payments.  Stockman, Stepp, and Jones made false statements to C&A's Audit Committee and provided the Audit Committee with false position papers regarding the transactions.  Each knew, or was reckless in not knowing, that KPMG would rely of these false statements and documents in connection with its audit of C&A’s financial statement for 2003.

B.Purchasing Rebates  

(i) Goods and Services

26.Supply contracts in the automotive industry frequently provide that suppliers will pay rebates to their customers in return for a specified volume or type of future business.  Rebates are properly recorded by the customer as reductions in cost, which has the effect of increasing income.  However, because the customer is not entitled to the rebate until the promised purchases have been made, immediate recognition of the entire rebate is inconsistent with GAAP.  

27.In early 2002 C&A began to further inflate its quarterly earnings by improperly recognizing rebates tied to the future purchases of goods and services.  As

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