SEC Charges Royal Bank of Canada with Internal Accounting Controls Violations

The Securities and Exchange Commission today announced that Canada’s largest bank, Royal Bank of Canada, will pay a $6 million penalty to settle charges that it violated the books and records and internal accounting controls provisions of the securities laws relating to its accounting for its costs of internally developed software. The SEC’s order finds that, from 2008 through 2020, Royal Bank of Canada’s accounting controls failed to ensure that the firm accurately accounted for its internally developed software project costs. The order finds that, for a portion of its internally developed software projects, Royal Bank of Canada applied a single rate to determine how much of those projects’ costs to capitalize, but it lacked a reliable method for determining the appropriate rate to apply, in part because it could not adequately differentiate between capitalizable and noncapitalizable costs.