Mo' CPA: the Koss Case Warning

The SEC moved in on Koss following the embezzlement.

....the SEC is punishing Koss Corporation for not adequately maintaining internal controls to reasonably assure the accuracy and reliability of financial reporting. While the complaint details many deficiencies, it also makes it clear that the embezzlement required the involvement of two people and multiple methods to escape detection. Moreover, what is required is reasonable, not absolute, assurance. After a crash has occurred, one can almost always opine with confidence that more could have been done to prevent it.

...the SEC forced Mr. Koss to reimburse Koss $242,419 in cash and 160,000 of options pursuant to Section 304 of the Sarbanes-Oxley Act. This bonus reimbursement, together with his previous voluntary reimbursement of $208,895 in bonuses to Koss Corporation represents his entire fiscal year 2008, 2009 and 2010 incentive bonuses.

A word to the wise.

HT:  Sequence