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How Hain Celestial improved its revenue recognition practices

Jaclyn Jaeger | December 18, 2018

The Hain Celestial Group recently settled charges with the Securities and Exchange Commission resulting from weaknesses in its internal controls. Why the food company was not assessed a monetary penalty is where the compliance lessons lie.

According to the SEC’s order, between 2014 and 2016, sales personnel for Hain Celestial offered the company’s two largest distributors incentives at the end of fiscal quarters to encourage the purchase of sufficient inventory for Hain to meet quarterly internal sales targets. The incentives offered by Hain Celestial included rights of return for products that spoiled or expired before they were sold to retailers, as well as cash incentives of up to $500,000, substantial discounts, and extended payment terms.

According to the SEC's order, some of the incentives were agreed to orally and not documented, and others were documented only in e-mail exchanges with the...

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