Risk of Sales Being Recognized in the Wrong Period in Direct-Shipment Transactions
First written in FY2021. 1 of 5 entries say "Mitigated", first in FY2022. Latest entry: FY2026.
No other company in this theme has enough history to compare yet.
- FY2026RestatedAnnual report
「More than 40% of our group’s total revenue, primarily in the facilities-materials and agricultural-materials businesses, comes from transactions in which products are shipped directly from suppliers to customers.」
The company has reconfirmed that drop-shipment transactions account for more than 40% of total revenue, creating cut-off risk from delays in identifying shipment dates, and that the risk is addressed through the submission of supporting documentation and inquiries about shipment status. - FY2025SoftenedAnnual report
「More than 40% of our group’s total revenue, primarily in the facilities-materials and agricultural-materials businesses, comes from transactions in which products are shipped directly from suppliers to customers.」
The disclosure of exposure to drop-shipment transactions has reverted from “more than 50%” in the previous disclosure to “more than 40%.” - FY2023WorsenedAnnual report
「More than 50% of our group’s total revenue, primarily in the facilities-materials and agricultural-materials businesses, comes from transactions in which products are shipped directly from suppliers to customers.」
The disclosure states that the proportion of drop-shipment transactions increased from more than 40% to more than 50% of total revenue, expanding exposure to revenue cut-off risk. - FY2022MitigatedAnnual report
「As countermeasures, our group requests that suppliers promptly send documentation relating to shipments and deliveries. For transactions near the fiscal year-end, we also inquire with suppliers about shipment status and work to mitigate the risk.」
As measures addressing revenue cut-off risk in drop-shipment transactions, the company explicitly cited requests for the prompt submission of supporting documentation and inquiries about shipment status near the fiscal year-end. - FY2021First statedAnnual report
「More than 40% of our group’s total revenue, primarily in the facilities-materials and agricultural-materials businesses, comes from transactions in which products are shipped directly from suppliers to customers. In drop-shipment transactions, revenue is recognized based on shipment information provided by suppliers, creating a risk of misstating the period to which revenue belongs, including the possibility that revenue recognition may be delayed because shipment dates cannot be identified promptly.」
For drop-shipment transactions, which account for more than 40% of total revenue, the company has for the first time explicitly identified the risk of revenue being assigned to the wrong period due to delays in identifying shipment dates.