Japanese electronics giant NEC has settled with the U.S. Securities and Exchange Commission over charges that it improperly booked revenue from its customer contracts and did not maintain accurate books and records, causing the company to miss filing financial statements two years in a row.
The SEC said that for fiscal years 2000 through 2005, NEC filed annual reports that misstated revenues, net income or net loss. NEC improperly recognized revenues from contracts with customers that included the provision of hardware, software, and customer support, according to the SEC. The company should have deferred a substantial portion of these revenues pending future performance in accordance with U.S. generally accepted accounting principles.
From 2000 through 2006, the SEC said that NEC also did not maintain accurate books and records, and had deficient internal accounting controls. As a result, NEC is unable to restate its prior financial statements and to file annual reports for the fiscal years ended March 31, 2006, and March 31, 2007.
NEC entered into a settlement agreement with the SEC and as part of the settlement, the SEC issued a cease-and-desist order. NEC has not admitted or denied the findings by the SEC in the order. No monetary penalties are required under the order.
