United States SEC Fines Royal Bank of Canada $6 Million for Failure to Accurately Account for Internally Developed Software Project Costs But Applied an Accounting Rate without Sufficient Basis, Could Not Adequately Differentiate Between Capitalizable & Non-Capitalizable Costs
4th November 2023 | Hong Kong
The United States Securities & Exchange Commission (SEC) has fined Royal Bank of Canada (RBC) $6 million for failure to accurately account for internally developed software project costs but applied an accounting rate without sufficient basis (could not adequately differentiate between capitalizable & non-capitalizable costs). United States SEC: “The SEC’s order finds that, from 2008 through 2020, Royal Bank of Canada’s accounting controls failed to ensure that the firm accurately accounted for its internally developed software project costs. The order finds that, for a portion of its internally developed software projects, Royal Bank of Canada applied a single rate to determine how much of those projects’ costs to capitalize, but it lacked a reliable method for determining the appropriate rate to apply, in part because it could not adequately differentiate between capitalizable and noncapitalizable costs. This resulted in, among other things, the bank using the same capitalization rate each year without a sufficient basis and capitalizing certain costs that were ineligible under the appropriate accounting methodology.” See below for more info:
“ United States SEC Fines Royal Bank of Canada $6 Million for Failure to Accurately Account for Internally Developed Software Project Costs But Applied an Accounting Rate without Sufficient Basis, Could Not Adequately Differentiate Between Capitalizable & Non-Capitalizable Costs “
Nicholas P. Grippo, Regional Director of the Philadelphia Regional Office: “Royal Bank of Canada had longstanding internal accounting control deficiencies that it failed to adequately address. Properly functioning internal accounting controls are a front-line defense and help ensure accurate financial disclosures—the backbone of our capital markets.”
United States SEC Fines Royal Bank of Canada $6 Million for Failure to Accurately Account for Internally Developed Software Project Costs But Applied an Accounting Rate without Sufficient Basis
2nd November 2023 – The Securities and Exchange Commission today announced that Canada’s largest bank, Royal Bank of Canada, will pay a $6 million penalty to settle charges that it violated the books and records and internal accounting controls provisions of the securities laws relating to its accounting for its costs of internally developed software. The SEC’s order finds that, from 2008 through 2020, Royal Bank of Canada’s accounting controls failed to ensure that the firm accurately accounted for its internally developed software project costs. The order finds that, for a portion of its internally developed software projects, Royal Bank of Canada applied a single rate to determine how much of those projects’ costs to capitalize, but it lacked a reliable method for determining the appropriate rate to apply, in part because it could not adequately differentiate between capitalizable and noncapitalizable costs. This resulted in, among other things, the bank using the same capitalization rate each year without a sufficient basis and capitalizing certain costs that were ineligible under the appropriate accounting methodology.
The SEC’s order finds that Royal Bank of Canada violated the internal accounting controls and books and records provisions of the Securities Exchange Act of 1934. Without admitting or denying the findings, Royal Bank of Canada has agreed to cease and desist from committing or causing any violations or any future violations of these provisions. Royal Bank of Canada also agreed to pay a $6 million civil penalty, offset by amounts paid to Canadian regulatory authorities as a result of the same conduct. The SEC considered Royal Bank of Canada’s remedial acts in determining to accept the settlement. The SEC’s investigation was conducted by Norman P. Ostrove and was supervised by Julia C. Green, Scott A. Thompson, and Mr. Grippo, all with the Philadelphia Regional Office. The SEC appreciates the assistance of the Ontario Securities Commission and Quebec’s Autorité des Marchés Financiers.
Sign Up / Register
Caproasia Users
- Manage $20 million to $3 billion of assets
- Invest $3 million to $300 million
- Advise institutions, billionaires, UHNWs & HNWs
Caproasia Platforms | 11,000 Investors & Advisors
- Caproasia.com
- Caproasia Access
- Caproasia Events
- The Financial Centre | Find Services
- Membership
- Family Office Circle
- Professional Investor Circle
- Investor Relations Network
Monthly Roundtable & Networking
Family Office Programs
The 2024 Investment Day
- March 2024 - Hong Kong
- March 2024 - Singapore
- June 2024 - Hong Kong
- June 2024 - Singapore
- Sept 2024 - Hong Kong
- Sept 2024 - Singapore
- Visit: The Investment Day | Register: Click here
Caproasia Summits
- The Investment Summit
- The Private Wealth Summit
- The Family Office Summit
- The CEO & Entrepreneur Summit
- The Capital Markets Summit
- The ESG / Sustainable Investment Summit
