Entergy Corp. Settles for $12 Million Over SEC Violations of Internal Accounting Controls

The Securities and Exchange Commission (SEC) has announced that Entergy Corporation, a Louisiana-based electric company, has agreed to pay a civil monetary penalty of $12 million. This settlement addresses allegations regarding the company’s failure to maintain adequate internal accounting controls, which resulted in inaccuracies in its books and financial statements.

According to the SEC complaint filed in the U.S. District Court for the District of Columbia, Entergy reported its materials and supplies as assets on its balance sheet at average costs from mid-2018 to the present. It is stated that the company was informed by its employees and management consultants that this asset contained a significant amount of potential excess. This excess included aging materials and supplies that exceeded Entergy's projected future usage or the maximum stock levels required by its business units.

The complaint also alleges that Entergy failed to establish a comprehensive process to review these materials and supplies and identify the excess. Additionally, this process should have remeasured the excess in accordance with Generally Accepted Accounting Principles (GAAP) and recorded the differences between the average costs and the remeasured costs as expenses.

Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, emphasized the importance of internal accounting controls in ensuring the accuracy and reliability of financial statements. Wadhwa noted that investors expect publicly traded companies like Entergy to have sufficient internal accounting controls in place.

Entergy has consented to a final judgment, subject to court approval, without admitting or denying the allegations in the SEC’s complaint. This judgment includes a permanent injunction against violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, the payment of a civil monetary penalty of $12 million, and the adoption of recommendations from an independent consultant to improve its internal accounting controls.