General Electric pays fine in accounting fraud charge

Washington - General Electric is to pay a 50-million-dollar fine for allegedly misleading investors with false financial statements, US regulators said Tuesday. The Securities and Exchange Commission claimed that GE used improper accounting practices in four separate incidents in 2002 and 2003 to increase reported earnings or revenue.
"GE bent the accounting rules beyond the breaking point," Robert Khuzami, the agency's director of the division of enforcement, said in a statement. "Overly aggressive accounting can distort a company's true financial condition and mislead investors."
The finding comes as part of a regulatory look into the potential misuse of hedge accounting. GE corrected the violations in the course of the investigation and has not admitted or denied the SEC's allegations. The violations occurred in the firm's commercial paper funding programme and in the reporting of locomotive and aircraft engine part sales, the SEC said.
The company agreed to pay the 50-million-dollar fine to settle the allegations.
In a statement, GE said it had cooperated with the government investigation and conducted its own internal review to make sure any issues were properly addressed.
"The errors at issue fell short of our standards, and we have implemented numerous remedial actions and internal control enhancements to prevent such errors from recurring, as previously described in our SEC filings, including measures to strengthen our controllership and technical accounting resources and capabilities," the Fairfield, Connecticut-based company said.

Posted by Earth Times Staff
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