Accounting & Tax

Ex-CFO of Dollar General to Pay $1.2 Million

Discount retailer delayed recognizing big-ticket freight expenses, alleges the SEC, in order to meet analyst expectations and targets for employee ...
Stephen TaubApril 14, 2006

Brian Burr, a former chief financial officer of discount retailer Dollar General, has agreed to settle Securities and Exchange Commission charges stemming from an accounting scandal dating to the late 1990s.

The SEC alleged that in 1999 and 2000, Dollar General’s accounting staff determined that it should have recognized $13.4 million in import freight expenses in fiscal 1999.

Rather than restating prior periods or recognizing all the expense in fiscal year 1999, continued the commission, Burr participated in discussions of other possible ways to account for the $13.4 million. The SEC also alleged that on February 5, 2000, Dollar General’s former controller sent a memorandum to Burr and others describing a $10 million “variance” in relation to freight expenses and recommending that the company make up the shortfall at a rate of $833,000 per month during the 2000 fiscal year.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Dollar General acted on this recommendation, wrote the SEC, enabling it to meet analyst expectations for fiscal 1999, as well as certain internal targets for employee bonuses.

The commission also alleged that after Burr was fired by the company in February 2001, he engaged in insider trading by exercising options and selling shares of Dollar General stock shortly before the company’s April 2001 announcement of accounting irregularities and the need for a restatement.

In April 2005, Dollar General agreed to pay $10 million to settle related charges with the SEC. The regulator also settled charges with former chief executive officer Cal Turner, former controller Randy Sanderson, and former president Bobby Carpenter, and issued a settled administrative order against former accounting manager Stephen C. Jones. Burr was also charged but chose not to settle at the time.

In the current agreement, without admitting or denying the SEC’s allegations, Burr agreed to pay roughly $1.2 million, including disgorgement, civil penalties, and interest; to be permanently enjoined from violating the antifraud, internal-controls, books-and-records, and lying-to-auditor provisions of the federal securities laws; and to be barred from serving as an officer or director of a public company for five years.