Stay informed with free updates
Simply subscribe to Accountancy myFT Digest – delivered straight to your inbox.
The number of major U.S. companies missing annual reporting deadlines has surged this year, leaving investors in the dark as executives and auditors grapple with accounting problems and weaknesses in their financial controls.
The annual rush to sign off on financial statements this week revealed problems at companies ranging from chemicals giant Chemours to toy maker Mattel.
Chemours, the maker of Teflon, placed its CEO and two top financial executives on administrative leave Thursday while it investigates financial practices that may have affected executive bonuses.
Agricultural products group Archer Daniels Midland, which placed its chief financial officer on leave in January while investigating accounting practices at its food ingredients business, said on Friday that it could take another two weeks to finalize its audited numbers for 2023.
Meanwhile, shares in New York Community Bancorp fell sharply on Friday after the regional lender delayed its annual report, saying it had found material weaknesses in internal controls that guide how loans are reviewed.
Mattel Toys said on Thursday that it also found weaknesses in its internal controls over financial reporting, and that it would need more time to issue its annual report.
According to data provider AlphaSense, 16 companies with market capitalizations of more than $1 billion have said so far this year that they will miss annual reporting deadlines, which is 60 days after the end of the fiscal year for large companies. That's nearly double the number compared to last year, when nine companies said they needed additional time.
Auditors of major American companies are required to sign off not only on the annual numbers themselves, but also on the internal controls and systems the company uses to produce those numbers. Regulators require that weaknesses in those controls be clearly communicated to investors.
Chemours said it was examining “one or more” potential material weaknesses in its internal controls, and a series of other issues including how whistleblower complaints were handled and whether senior executives set “the right tone at the top.”
In addition to CEO Mark Newman, the company has placed CFO Jonathan Locke and Controller Camilla Wiesel on leave.
Chemours, which was spun off from Dupont in 2015, said it is examining how working capital is managed, and how that affects the financial metrics on which executive compensation is based. Its shares fell 32 percent on the news, wiping $1.4 billion off its market value. By midday Friday, shares had recovered and were up 3.8 percent.
