SLM Corp., the country's largest provider of student loans, announced that it had fired the chief financial officer for one of its units,** and demoted another manager for inflating revenue in a bid to achieve performance goals and collect higher bonuses.
The company, better known as Sallie Mae, said that the Securities and Exchange Commission had decided not to take enforcement action against it or the managers over the accounting errors, which took place in 2003. The chief financial officer was terminated in July 2005. The SEC had opened an informal probe in January 2004.
Sallie Mae said that it had learned through an internal investigation that on three occasions in 2003, senior managers in a debt collection unit intentionally recorded revenue from loan payments made or scheduled to be made in the first few days of a month in the prior month.
While the amounts in question represented less than $75,000 of its 2003 revenue, Sallie Mae said that the practices violated company policy and generally accepted accounting principles. Sallie Mae said that it had strengthened the unit's financial controls, and was denying the relevant bonuses to the managers involved.
Sallie Mae manages more than $116 billion in student loans for about 8 million borrowers, and is no longer tied to the federal government.
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** An earlier version of this story incorrectly identified the fired executive's scope of responsibilities. WebCPA regrets the error.
