Accounting misconduct discovered at CAT subsidiary

By WEEK Producer

Accounting misconduct discovered at CAT subsidiary

January 18, 2013 Updated Jan 18, 2013 at 9:41 PM CDT

Caterpillar announced Friday that it has discovered "accounting misconduct" on the part of senior managers at a Chinese subsidiary called Siwei Mechanical and Electrical Manufacturing.

According to a news release from Caterpillar, several senior managers at the company inflated statements of Siwei's inventory and profits.

The "accounting misconduct", Caterpillar doesn't call it fraud, was discovered in November of last year.

Caterpillar says "several" senior managers have been removed and replaced, but is not aware of any arrests or criminal investigations.

Caterpillar said it would cooperate in any investigation.

As a result of the "accounting misconduct", CAT is writing off $580 million of its investment in Siwei as a "goodwill impairment charge" meaning that's how much the value of the property has decreased.