Whether a referral to counsel is warranted from ghost-employee payroll extract

Situation

An SEC comment letter on revenue put ghost-employee payroll extract in front of restatement project controller in a construction contractor on percentage-of-completion. This Forensic Accounting / Revenue Integrity close is a referral to counsel is warranted from ghost-employee payroll extract, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Restatement project controller in a construction contractor on percentage-of-completion must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using ghost-employee payroll extract after an SEC comment letter on revenue.

Hypotheses to test

• An SEC comment letter on revenue is noise around an already-controlled Revenue Integrity process in a construction contractor on percentage-of-completion, given ghost-employee payroll extract.
• An SEC comment letter on revenue is the event in ghost-employee payroll extract that forces Remove access or reverse the item for restatement project controller under Forensic Accounting.
• Ghost-employee payroll extract shows a one-file miss after an SEC comment letter on revenue, not a Revenue Integrity program failure.
• Ghost-employee payroll extract cannot decide a referral to counsel is warranted yet after an SEC comment letter on revenue; hold is the only Forensic Accounting close a construction contractor on percentage-of-completion can defend.

Analysis required

• Quantify the entry if restatement project controller has to reverse it.
• Separate a close-process miss from a qualitative SAB 99 issue in a construction contractor on percentage-of-completion.
• Reconstruct vendor, journal, or inventory lines in ghost-employee payroll extract through the window opened by an SEC comment letter on revenue.
• For this Forensic Accounting Revenue Integrity file, read ghost-employee payroll extract against an SEC comment letter on revenue and write the one fact that would move a referral to counsel is warranted for restatement project controller.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Forensic Accounting / Revenue Integrity packet (ghost-employee payroll extract after an SEC comment letter on revenue). The follow-on Revenue Integrity action is what restatement project controller does next: implement the option, assign an owner, and log the missing fact.