Greg Giugliano, National Partner-In-Charge of Assurance Services, Quoted in Compliance Week Article "PCAOB Action Illuminates Returns Accounting"
By Tammy Whitehouse
In the article, Mr. Giugliano commented that the accounting erred in treating returned products as exchanged products. Additionally, Mr. Giugliano said, “The company accepted returns for expired and short-dated products, and replaced those products with currently dated, similar products. To be treated as an exchange, the products would have to be of similar quality and price. Clearly a currently dated product is not similar in quality and price to an expired product.” The effect on financial statements, all else being constant, would be to overstate sales and overstate gross profit, he said.