City Colleges x Quick Access X D21 Mattel - Fall 2 x 3 Case Study A: X Financial Rep X Mail - Chance X 5 Launch Meeti X New Tab X + V X C @ File | C:/Users/Chancelle/Downloads/Mattel%20PwC%20Case.pdf Financial Reporting at Mattel 1 / 28 100% + TRUNG NGUYEN MARSHAL HERRMANN JULIA KELLEY Financial Reporting at Mattel In September 2020, Diana Ferguson, the newly appointed Audit Committee chair of Mattel, Inc.'s board of directors, was nearing her first committee meeting. Mattel had hired Ferguson, the chief financial officer of venture capital firm Cleveland Avenue LLC, to join its board two months earlier. She had arrived at a pivotal time for Mattel. Mattel was a toy and game manufacturer that had recently endured several tough years of declining revenue. Consumer demand for traditional toys and games had waned, so retailers purchased less inventory from Mattel and other manufacturers. In 2018, Mattel's problems worsened. Its Tax team discovered a significant reporting error in its third-quarter financial results. After consulting with its external auditor, PricewaterhouseCoopers (PwC), Mattel's finance team opted not to issue a correction. They instead retroactively changed its reporting process the following quarter, effectively concealing the mistake. In 2019, an anonymous whistleblower reported the incident, setting off a chain of negative press coverage and senior-level resignations. The whistleblower letter triggered an internal investigation into Mattel's accounting procedures.? In October 2019, Mattel announced that while there were shortcomings in its reporting procedures, the actions it took did not amount to fraud. However, in early 2020, the U.S. Securities and Exchange Commission (SEC) launched a fresh investigation into the accounting error and subsequent cover-up.4 In light of these events, Ferguson faced a challenging road ahead as the new Audit Committee chair. There were several important issues for the Committee to consider. Its members would have to review the decision to retain PWC as Mattel's auditor for 2021. Mattel's scandal was just one of several recent accounting issues involving PWC that had raised questions about the audit firm's independence and objectivity.56 However, Mattel had a long history with PWC. Moreover, PwC had since removed Joshua Abrahams, who was the lead audit partner in charge of Mattel's audit, and had publicly stated its commitment to independence. More importantly, the accounting scandal had revealed the company's poor internal controls and board oversight over financial reporting. The Committee needed to tackle its corporate governance issues and find ways to restore investor confidence in Mattel's financial disclosures. 54.F Mostly sunny OLD DELL O 6:37 PM 9/27/2022