Wednesday August 9, 2017
Globalscape's internal audit committee announced an over statement of earnings by 6%.
But the stock dropped 18%. It has been falling the last couple of weeks.
This demonstrates that failure to follow the rules can have a larger impact than the act itself. The error was on the order of $219,000 resulting in a net income of
$3.7 million rather than the $3.9 million reported. So a relatively small error results in a massive loss of market capitalization. This is why we are studying revenue recognition in ACCT 3303.
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