ABB Falls in Financial Control Lapses Again
2019-04-16 11:52 Tuesday
ABB's spokesman said Monday that the company is correcting the latest defects. Two years ago, ABB suffered a $100m loss in South Korea due to poor financial controls. The financial problems were discovered by KPMG as it reviewed ABB's 2018 accounts.
The spokesman declined to elaborate on the internal control weaknesses, saying they were "certainly failed" in the North American and group's applications. Nor did he say how long those weaknesses had existed.
"These control lapses did not result in any financial misstatement and there is no need to restate the figures," ABB said in a statement.
"However, the failure of these controls could result in a potential misstatement of the company's financial statements and is therefore referred to as a major weakness."
ABB said it was already strengthening risk identification processes, training and trying to clearly communicate control responsibilities.
"We cannot be certain that the steps we have taken and expect to take will be sufficient to address the identified deficiencies or that our internal controls on financial reporting are effective," ABB said in a filing with the us securities and exchange commission.
Zurich-based ABB said the internal controls had led to adverse financial consequences for executive committee members. ABB said short-term incentives "reflect substantial weaknesses in control for some executives" but did not specify which executives were affected.
Ulrich Spiesshofer, ABB's Chief Executive, saw his short-term pay fall from 2.4 million Swiss francs a year ago to 2.1 million Swiss francs ($2.1m) in 2018, according to the company's 2018 annual report. His total compensation fell 8% to 8.5 million Swiss francs. Bonuses for all three division heads fell, including Power Grids head Claudio Facchin.
ABB's 2018 annual report shows that executive committee members, including Spiesshofer, achieved an average of 85% of their performance targets, well below the average of 95.4% in 2017.