ABB said on Monday suspected fraud in South Korea cut its 2016 net income by $64 million in a case that has prompted the Swiss electrical products maker's auditor to conclude the company failed to maintain effective internal controls.
Full-year net income was revised down to $1.89 billion, ABB said in its annual report, down from $1.96 billion reported in February. The pre-tax impact was $73 million, less than the roughly $100 million previously reported, due to insurance recoveries.
ABB has said a South Korean treasurer disappeared after engaging in a "sophisticated criminal scheme". Internal auditor Ernst & Young concluded "ABB Ltd has not maintained effective internal control over financial reporting as of December 31, 2016," according to the annual report.