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Recently news broke that Under Armour is under investigation by the Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) in regards to its accounting practices. The investigation commenced in 2017 and many media outlets are speculating that the investigation is largely focused on improper revenue recognition. While the exact accounting practices being investigated by the SEC and DOJ are not confirmed, revenue recognition is one of the most critical accounting policies of any business. With the required implementation of Accounting Standards Codification 606 – Revenue from Contracts with Customers (ASC 606) for calendar year public companies in 2018 and private companies in 2019, all businesses need to make sure they have a thorough understanding of the proper way to recognize revenue under this comprehensive new revenue standard. As ASC 606 allows for management to make more judgments and estimates than the previous standard, which was largely rules based, this investigation serves as a warning that all businesses’ revenue recognition practices remain closely scrutinized.
If your company would like guidance maneuvering through this complex accounting change, DGC is here to help. Contact a member of your DGC client service team or reach out directly to Jon Butler, CPA at 781-937-5369 / email@example.com or Nick Tamvaklis, CPA, MST at 781-937-5147 / firstname.lastname@example.org.