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ARTICLE · 19 JUNE 2023

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SEC Charges Improper Revenue Recognition Practices—Still A Hot Topic For SEC Enforcement

Cooley LLP
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Last month, Cornerstone Research told us that accounting and auditing enforcement activity by the SEC in FY 2022 increased by 55% over the prior fiscal year to 68 enforcement actions...

United StatesAccounting and Audit
Cydney Posner
Cydney Posner
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Last month, Cornerstone Research told us that accounting and auditing enforcement activity by the SEC in FY 2022 increased by 55% over the prior fiscal year to 68 enforcement actions, 25 of which alleged improper revenue recognition. Among the actions involving accounting restatements, 63% involved allegations regarding revenue recognition and internal control over financial reporting. We also saw a steep increase in actions against individuals, reportedly reflecting the emphasis of SEC Chair Gary Gensler on imposing individual accountability. (See this PubCo post.) With this new SEC Order charging USA Technologies, Inc., now known as ...er... Cantaloupe, Inc.—clearly someone's favorite fruit—with improper revenue recognition practices and ICFR violations, the SEC continues that trend. For their roles participating in these improper activities, the SEC also brought actions against USAT's former VP of Sales and Marketing and its former Chief Services Officer.

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