Mattel’s CFO is departing the company on the same day as it unveils the findings of an investigation into August’s whistleblower letter.
The letter, sent anonymously to PwC earlier this year, raised concerns about the accuracy of Mattel’s accounting and whether the toy firm’s outside auditor was independent.
Today Mattel announced that the Audit Committee of its Board of Directors has completed an independent investigation, and found errors in accountancy for the second half of 2017, but concluded the missteps had no impact on the full year.
The investigation determined that income tax expense was understated by $109 million in the third quarter of 2017, and overstated by $109 million in the fourth quarter of 2017. The errors were non-cash, did not affect operating income or EBITDA, and were found to have no impact on Mattel’s full year financial results for 2017 or subsequent periods.
The objectivity and impartiality of Mattel’s outside auditor was also found to be unimpaired, and can continue as its independent auditor. Mattel’s outside auditor agrees with that conclusion.
Despite that, the investigation conceded that Mattel has “certain material weaknesses” in its internal control over financial reporting.
Mattel announced today that Chief Financial Officer Joseph J. Euteneuer will leave the company, though it did not directly link Euteneuer to the 2017 accounting discrepancies, or his departure to the findings in today’s investigation results.
“Joe has been a valued member of our leadership team since joining Mattel two years ago," said Ynon Kreiz, Chairman and Chief Executive Officer of Mattel in a statement.
"He has played a key role in our Structural Simplification program which is nearing completion, and made meaningful contributions to the significant progress we have made in the first phase of our strategy to restore profitability. I thank him for his commitment through the transition of the CFO role.”
Euteneuer will remain on during a transition period of up to six months as Mattel searches for his replacement.
“I am grateful for my time at the Company and look forward to continue working with the leadership and finance teams to ensure a seamless transition,” the outgoing CFO said.