The Securities and Exchange Commission has issued a cease-and-desist order against Lattice Semiconductor for an accounting scandal that cost a finance executive his job.
In October 2005, the SEC settled its case with Ronald Lee Hoyt, the semiconductor manufacturer’s former controller and director of finance. The commission alleged that Hoyt made “unsupported journal entries” totaling $5.5 million “to offset apparent understated balances” in the company’s deferred revenue account. Without admitting or denying the findings, Hoyt agreed not to appear before the commission as an accountant for three years, after which he could apply to be reinstated.
In the order issued Friday, the SEC alleged that Lattice’s inadequate internal controls led to inaccurate financial reports for the second and third quarters of 2003. Because Hoyt could both create and enter journal entries into the general ledger, he was able to conceal inaccurate accounting methods from senior management and an auditor for seven months, according to the commission.
In April 2004, Lattice restated its financial results for the first three quarters of 2003. According to the SEC, Lattice’s previously reported revenue for the first nine months of 2003 decreased by $10.6 million (about 6 percent), its deferred income increased by $3.4 million (in addition to the $5.5 million already “improperly” added), and its previously reported loss for the period increased by $8.9 million.
Lattice consented to issuance of the cease-and-desist order without admitting or denying the regulator’s findings.