Sanmina Corporation (SANM), a manufacturer of printed circuit boards and electrical equipment components, suggests finance division employees inappropriately slashed cost estimates on their own and lied to auditors when questioned about their actions.

Characterized as “unsupported adjustments”, Sanmina’s Board led internal investigation blamed the “tone at the top” of the finance division for financial misstatements that have now stretched into a third quarterly reporting period:

“The division had a culture that did not recognize or emphasize the importance of rigor in the division’s quarterly contract estimate review process…”

Missing from the explanation regarding the cost estimate errors is why the company also misstated revenue.

In the nine months ended July 2, 2022, Sanmina’s restated financials reveal the company:

—Understated revenue $6.8 million, or 0.12%
—Understated cost of sales $18.9 million, or 0.36%
—Overstated operating income $12.1 million, or 4.9%

Executives and the Board appear to be trying to put some distance between themselves and those they say are responsible:

“The division, like other Company divisions, has a stand-alone finance organization, which reports directly to the Company’s finance organization and indirectly to the management of the division”