Servotronics Inc. has another week to meet the American Stock Exchange's listing standards after the Elma servovalve and cutlery manufacturer conducts an investigation into "unauthorized practices by a senior financial officer" involving the company's payroll accounts.
Servotronics is investigating checks that were written against its payroll account because they "were not in conformity with the company's controls and procedures," the firm said in a Securities and Exchange Commission filing.
The company has not identified the "senior financial officer" involved, and Servotronics officials could not be reached to comment on Thursday. But the company, in SEC filings, has said the probe centers around $56,000 in checks that the senior financial officer issued to themselves during the first half of this year.
Servotronics also said in its filings that it believes that "other transactions not supported by the appropriate documents may have occurred in earlier years."
Lee D. Burns, Servotronics' chief financial officer who had been on medical leave since mid-summer, resigned at the end of last week, the company disclosed this week in an SEC filing.
Cari L. Jaroslawsky, who has been serving as Servotronics' interim chief financial officer since early August, is continuing to serve in that role, the company said.
Because of that investigation, Servotronics' auditors, PricewaterhouseCoopers, told the company in mid-August that it could not complete its review of the quarterly financial report that the company is required to file with the SEC within 45 days of the quarter's end.
That caused Servotronics to fall out of compliance with the Amex's standards requiring its listed companies to file quarterly financial reports that have been reviewed by its accountants on time.
The exchange gave Servotronics until Sept. 9 to file a plan to bring the company into compliance with the listing requirements and the company submitted its plan on time. The Amex notified Servotronics that it had accepted the plan last week and gave the company until Oct. 6 to meet the listing standards. If Servotronics doesn't meet the Oct. 6 deadline or show that it is making progress in accordance with its plan, the company said it still could face delisting.
In the interim, Servotronics dismissed PricewaterhouseCoopers on Sept. 7 and hired Freed Maxick & Battaglia to take over as its accounting firm. RSM McGladrey, a Minnesota-based business services firm that has ties to Freed Maxick, has been investigating the payroll account since mid-August.
Servotronics said there were no disagreements between it and the accounting firm during the last two fiscal years over issues that would have caused it to note them in its audit report. PricewaterhouseCoopers filed a letter with the SEC saying that it agreed with Servotronics' statement.