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CECO Environmental Admits Revenue Recognition Is Flawed
Engineering firm lacks documentation supporting the recognition of certain sales.
August 8, 2023
CECO Environmental Corp. (CECO), an industrial air quality, water treatment, and energy transition solutions provider, revealed a control deficiency relating to management’s review of its revenue recognition for contracts recognized over time in its Engineered Systems segment. The deficiency is related to the quarter ended March 31, 2023 and was discovered, according to CECO, while evaluating the quarter ended June 20, 2023:
“Specifically, for the quarter ended March 31, 2023, management did not retain appropriate documentation supporting the review of over time revenue recognition for customer contracts within the Engineered Systems segment.”
The Engineered systems segment accounts for approximately 66.9% of CECO’s sales in the first six months of 2023.
CECO reassured the material weakness in its controls over financial reporting (ICFRs) did not result in any material misstatements or disclosures and that no changes were required to any of its previously released interim or audited consolidated financial statements.
CECO says it’ll keep better records in the future.
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