Maxwell Technologies Case

Satisfactory Essays
Apparently, Maxwell Technologies, needed to appropriately account for their sales revenue, which was the main factor for the restatement of earnings. March 7th, 2013 Maxwell Technologies, announced problems with revenue timing. The terms for sales of certain transactions were not being communicated with the Finance and Accounting department; therefore, the revenue was not being accounted for within the financial statements as discovered during the investigation. Anytime the financial statement is affected by errors a restatement is in order whether the errors were caused by human error, a change in services, sales, inventory, etc. (Mohr, 2016).
The Sr. Vice President of Sales and Marketing resigned and other employees were terminated for
…show more content…
The orange bars and dark blue line represent what the Accounts Receivable (AR) and revenue looked like prior to the restatement, the red lines represent the adjusted AR and light blue line show what the restatement would have looked like provided everything had been reported accurately. The brown bars and green line show AR and revenue reported August 2013 (Konrad, 2013).
In the case of Maxwell Technologies, stocks were not affected in a negative way, due to the restatement. Luckily for them the earnings were not affected because a portion of the revenue was to replace the general and administrative expense. Although, errors were made in this instance the revenue was increasing and did not increase earnings. The restatement was due to negligence and lack of communication at Maxwell Technologies. It is believed the VP of Sales and Marketing gave the terminated employees the incentive to fiddle with the books, which led to the problems of revenue timing. The Sarbanes-Oxley Act, states companies should have Codes of conduct for all accounting and financial employees and documentation procedures for retention of document. Maxwell Technologies employees may have knowingly violated; however, it has not been proven if they willingly participated based on the direction of the VP. The violation of the VP appeared to be both knowingly and willingly (Prentice & Bredeson,
Get Access