Executive Summary
A recent $45 million settlement between UPS and the SEC over allegedly flawed goodwill impairment tests and earnings overstatements puts a spotlight on the goodwill impairment testing process. Whether it be market volatility, uncertainty around tariffs, or simply poor performance at a reporting unit (as was the case for UPS), proper evaluation of goodwill impairment testing inputs is critical to getting the process and numbers right and potentially avoiding a fine. The impairment charge in this case may have been a non-cash item but the civil penalty was a real expense.