Professor Elam

Weekend July  29, 2017

FLS missed its expected quarterly earnings.

Net earnings came in at 22 cents, half the expected 44 cents.

Read the article to see how this changed the overall market capitalization.

And in the when it rains it pours department or

Things are blackest just before they go, pitch black

A law firm is investigating accounting irregularities at FLS.

The investigation concerns whether Flowserve and certain of its officers and/or directors have violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

On July 27, 2017, Flowserve disclosed its financial and operating results for the second quarter of 2017 and full-year outlook, decreasing considerably below estimates. Flowserve stated that "certain immaterial accounting errors were identified in prior period financial statements for the period beginning in 2013 through the first quarter of 2017, which occurred primarily at two non-U.S. sites, and principally involved certain inventory and accounts receivable balances" and that it "has determined to amend its 2016 Form 10-K and the March 31, 2017 Form 10-Q to reflect the revisions." The Company also stated that it "has determined material weakness existed in its internal control structure at year-end 2016 and continued through the end of the 2017 second quarter. The company intends to institute remediation plans as a result of these errors. The cumulative effect of the changes to retained earnings as of March 31, 2017 was a reduction of approximately $30 million."

Whoops, this why we study GAAP and Internal Control in accounting class!