Revolution Lighting inquiry confirms accounting troubles
STAMFORD — Serious accounting violations affected Revolution Lighting Technologies’ financial reports inside the past five years, the enterprise has confirmed after carrying out an inquiry that becomes induced using an ongoing federal investigation.
Several employees will lose their jobs, however now not the CEO, as a result of irregularities tied to “bill-and-hold” transactions — in which the seller does not ship goods to the purchaser, however nevertheless statistics the related sales — the employer stated in a submitting inside the beyond week to the U.S. Securities and Exchange Commission, the agency investigating Revolution. At the same time, the Revolution’s Audit Committee has advocated revising the company’s fiscal effects from 2014 thru the primary 1/2 of 2018.
“The business enterprise had a cloth weakness in inner controls with recognize to revenue recognition from bill and hold transactions,” Revolution said, within the record to the SEC.
SEC officials declined to comment Monday.
In April 2018, the SEC issued a subpoena to the employer targeted on “sales reputation” practices in its Energy Source department.
After maintaining counsel and forensic-accounting specialists, the Audit Committee conducted an inner investigation that led to the termination of 5 Energy Source personnel. Despite the dismissals, the accounting errors identified thru that research had been “immaterial,” the agency said.
Last October, the SEC issued a second subpoena related to Revolution’s Value Lighting and All-Around Lighting divisions.
The Audit Committee then launched research to look at certain sales-related practices in those divisions, that specialize in invoice-and-keep accounting for certain transactions from 2014 via 2018.
The deliberate terminations include the chief monetary officer of Revolution’s multi-family housing division, which incorporates Value Lighting. Unnamed within the record to the SEC, he will leave after a ninety-day “transition length” into a non-accounting position.
After joining the enterprise in November 2016, he attempted to enhance the organization’s rules and tactics for bill-and-hold accounting. But he did not correctly enforce the advanced regulations and techniques, the Audit Committee observed.
In overdue October 2018, the multi-own family CFO was made aware of the falsified documents that came about in or around early 2016.
But the Audit Committee, the enterprise’s investigative crew, and other advisers and experts have been no longer informed of these irregularities for some other five months, in step with Revolution officers.
Value Lighting’s vice chairman of income may also be terminated. Frequently, he did not gain all signed bill-and-hold agreements in a well-timed manner, the business enterprise stated.
An unnamed systems analyst at Value Lighting, who inappropriately backdated files, will also be brushed off, the enterprise stated.
A range of former personnel has also been worried about unsuitable accounting, consistent with the Audit Committee. That listing consists of Value Lighting’s former CFO, who left the agency in mid-2016. He oversaw the wrongful altering and backdating of positive invoice-and-preserve documents, the business enterprise said.
Robert LaPenta, Revolution’s CEO, chairman, and president, did now not understand about the invoice-and-hold errors, consistent with the Audit Committee. He will continue to be as chief government.
LaPenta recently floated a plan to take the company non-public, but he and his associates later scuttled that inspiration.
Earlier this month, Revolution announced the hire of a new leader economic officer, to update the previous CFO, who stepped down ultimate month.
Revolution said that it has retained unbiased specialists to similarly determine its budget and propose improvements. But it’ll need to do without professional-offerings company RSM, which resigned in advance this month as Revolution’s registered accountant.
At the equal time, Revolution faces feasible de-listing from the Nasdaq inventory exchange. A associated hearing changed into held June 6.
Nasdaq officials declined to comment this week on whether or not the agency had made a very last choice on Revolution’s list repute.