Vending-machine payments provider USA Technologies Inc. has announced several senior-level management changes, including the departure of its chief financial officer and the creation of a new chief operating officer position, as well plans to improve its corporate governance in the wake of an investigation into its accounting practices.
The probe by the audit committee of USAT’s board of directors found USAT recognized some revenue too early in fiscal years 2017 and 2018, meaning that previously reported financial statements will be lowered by up to $5.5 million. Publicly traded USAT began investigating its contractual and accounting practices last September and has delayed filing financial reports in the mean time.
“Pressure to achieve sales targets gave rise to the premature and/or inappropriate recognition of revenues and reporting of connections [to USAT’s payment network] associated with certain of the examined transactions, typically occurring at or near the end of financial reporting periods,” the Malvern, Pa.-based company said in a Sunday filing with the Securities and Exchange Commission.
The filing describes several other shortcomings, including communication lapses and a failure by senior management to “timely or fully report certain employee complaints and concerns to the independent auditor and/or the Audit Committee.”
The top-level changes include a Friday disclosure that CFO Priyanka Singh had resigned effective Jan. 7. Singh came to USAT in March 2017 from merchant acquirer Global Payments Inc. In addition, chief services officer Michael Lawlor is now a consultant to the company, and two senior vice presidents have been reassigned. They will report to the new chief operating officer once that person is hired.
Other changes include the separation of the chief executive and chairman roles, with Stephen P. Herbert continuing as CEO but independent director Albin Moschner taking Herbert’s post as chairman. The company also plans to add two more independent directors to the board. Further, the board will create a compliance committee and hire a chief compliance officer who will report directly to that new panel.
The Sunday filing says the prematurely recognized revenues likely will be recognized in future quarters. The company said the probe is largely done, but there are a few matters yet to complete before it files its overdue annual report for fiscal 2018 ended last June 30 and quarterly report for fiscal 2019’s first three months ended Sept. 30.