SEC subpoenas CSX over years of accounting errors

CSX Corp. received a subpoena from the U.S. Securities and Exchange Commission focused on previously disclosed accounting errors and certain non-financial performance metrics. 

The subpoena asked the railroad company to produce documents about accounting mistakes CSX disclosed in its previous quarterly report, according to a regulatory filing on Thursday. The company received the subpoena this month and is cooperating with the probe, CSX said in the filing.

“While the company believes its reporting complied with applicable requirements in all material respects, the company cannot anticipate the timing, scope, outcome or possible impact of the investigation, financial or otherwise,” CSX said. 

The filing didn’t include details about the non-financial performance metrics the SEC was scrutinizing. The Jacksonville, Florida-based company didn’t immediately respond to requests for comment. 

CSX in August disclosed that it had to correct accounting errors for several prior periods tied to engineering scrap and engineering support labor. Miscoding of engineering materials and labor resulted in the company understating purchased services and labor and overstating properties, the company said at the time.

The mistakes weren’t deemed material enough by CSX to trigger a formal restatement of previously published financial statements. It fixed the errors via revision, a correction that companies quietly tuck into their regulatory filings without the fanfare of a special SEC filing.

The concern extended as far back as 2021, and the revisions spilled over into how CSX made pension-related adjustments to other comprehensive income. They also required the company to reclassify certain balance sheet items, according to the August filing.

While the mistakes weren’t material to prior periods, CSX said they would have been significant to 2024’s full-year results if they were repeated in this year’s second quarter.