CPI’s CFO resigns amid restatements of financials.
CPI Aerostructures to Restate Fiscal 2018 and Year-to-Date Fiscal 2019 Financial Statements as a Result of Errors in Connection With Revenue Recognition Under ASC Topic 606
GlobeNewswire GlobeNewswireFebruary 14, 2020
- No Expected Impact on Cash Flows for Relevant Fiscal Periods -
- Announces Departure of Chief Financial Officer; Appoints Acting Chief Financial Officer -
EDGEWOOD, N.Y., Feb. 14, 2020 (GLOBE NEWSWIRE) -- CPI Aerostructures, Inc. (“CPI Aero®” or the “Company”) (NYSE American: CVU) today announced that the Audit Committee of the Board of Directors of CPI Aero determined, based on the recommendation of management and in consultation with CPI Aero’s independent registered public accounting firm, that the Company’s financial statements included in its annual report on Form 10-K for the year ended December 31, 2018, quarterly reports on Forms 10-Q for the quarters ended March 31, 2018, June 30, 2018, and September 30, 2018, and quarterly reports on Forms 10-Q for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019 should no longer be relied upon due to an error in those financial statements relating to the Company’s recognition of revenue from contracts with customers under ASC Topic 606. Similarly, the independent auditor’s reports on the effectiveness of internal control over financial reporting for the year ended December 31, 2018, management’s reports on the effectiveness of internal control over financial reporting, press releases, and investor communications describing the Company’s financial statements for such periods should no longer be relied upon. The Company’s cash flows from operations for the affected periods are not expected to be impacted.
The error was uncovered as part of the preparation of the Company’s 2019 annual financial statements. After reconsideration of the terms of the Company’s contracts with customers, Management’s preliminary conclusion is that certain revenues and net income were recognized prematurely or inaccurately due to an incorrect application of generally accepted accounting principles. Therefore, previously reported revenue and net income are believed to have been overstated. The error is also expected to have an impact on the Company’s balance sheets for the affected periods. Specifically, retained earnings and contract assets are believed to be overstated.
The Company expects to amend its annual report on Form 10-K for the year ended December 31, 2018 and its quarterly reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018, September 30, 2018, March 31, 2019, June 30, 2019, and September 30, 2019, and to restate the financial statements and other disclosures contained therein as soon as reasonably practical.
