According to the SEC, "This is a case of financial reporting, books and records, and internal accounting controls violations by Akorn, Inc. ("Akorn"). In May 2016, Akorn restated its financial statements for fiscal year 2014. Its restatement, among other things, acknowledged material weaknesses in its internal control over financial reporting ("ICFR") and disclosed that previously reported net revenue for 2014 was overstated by approximately 7 percent and previously reported income from continuing operations before income taxes for 2014 was overstated by approximately 136 percent. Akorn's inaccurate 2014 financial statements resulted from various errors in Akorn's accrual of rebates and other contractual allowances using a process known as "gross-to-net" revenue accounting as well as its recognition of $2.9 million in revenue for a portion of a transaction with one of its wholesaler customers despite a lack of a basis on which to properly recognize such revenue in accordance with generally accepted accounting principles ("GAAP")."

"According to the Commission's complaint, in May 2016, Akorn restated its financial statements for fiscal year 2014 acknowledging material weaknesses in its internal control over financial reporting related, in relevant part, to controls surrounding the company's gross-to-net reserve accounts and estimates. In its restatement, the company also disclosed that it overstated net revenue for 2014 by approximately 7 percent and income from continuing operations before income taxes for 2014 by approximately 136 percent. Akorn's material weaknesses persisted over multiple reporting periods and contributed to Akorn's materially inaccurate 2014 financial statements."