The Securities and Exchange Commission has announced that it has reached a settlement with the specialty retailer Tandy Leather Factory Inc. and its former chief executive officer Shannon Greene, over charges of accounting, reporting, and control failures that led to a multi-year restatement of company financial statements.
Tandy’s inventory tracking system was found to be incapable of supporting its disclosed inventory accounting methodology because “it did not properly maintain historical cost information for its inventory,” the SEC said in a statement. Tandy’s financial statements were filled with inaccurate financial information as a result, which in turn impacted the company’s inventory and income calculations for years.
Greene and others at Tandy were aware of the failings of the inventory tracking system, but did not adequately remedy them, the SEC found. The company also failed to design and maintain proper accounting measures to ensure that Tandy’s transactions were recorded in accordance with “generally accepted accounting principles.”
Greene also inaccurately said that Tandy’s disclosure controls and procedures and internal control over financial reporting were effective, which was the result of a failure to properly maintain and evaluate these processes.
While they did not admit nor deny the order’s findings, Tandy and Greene each paid civil penalties of $200,000 and $25,000, respectively. Last month, Tandy issued restated financial statements for fiscal years 2017 and 2018, each quarter in fiscal year 2018, and the first quarter of fiscal year 2019.
“We and our auditors will continue the push to complete our 2020 and 2021-to-date financials, so that we are fully current as soon as possible,” Janet Carr, the CEO of Tandy, said in a statement. Once Tandy is current in its financial reporting, it will apply for relisting on the Nasdaq. 