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Adtalem Repeatedly Recognizes Non-Existent Revenue
Education provider overstates sales two consecutive years following scrutiny of non-GAAP accounting.
September 1, 2023
Adtalem Global Education Inc (ATGE), an online post-secondary education provider, improperly recognized tuition revenue it hoped students would pay in the future. The policy resulted in Adtalem reporting too much revenue in fiscal years 2021 and 2022.
The company offers scholarships and discounts on future tuition, which Adtalem recognized immediately rather than as a separate performance obligation in its Medical and Veterinary segment.
Cumulatively, Adtalem overstated revenue $12.9 million , or 0.56% in FY22-23, plus the company:
—Overstated operating income $3.7 million, or 4.8% in the year ended June 30, 2022
—Overstated operating income $7.6 million, or 6.9% in the year ended June 30, 2021
—Overstated net income $6.7 million, or 2.1% in the year ended June 30, 2022
The company says the errors are not material and will not correct previously filed reports.
Instead, Adtalem corrected the errors in its latest annual report.
The admission comes three months after Adtalem was forced to justify its non-GAAP financial measures to the SEC. The company excludes restructuring costs from adjusted profitability metrics, arguing they’re not normal, recurring operating expenses.
The company has adjusted away restructuring expenses every year for more than a decade.
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