Nov. 23 (UPI) — The world’s largest courier service, UPS, will pay $45 million in fines after settling allegations that one of its units misrepresented its profits, the U.S. Securities and Exchange Commission confirmed in a released this week.

The SEC has now settled charges with the Atlanta-based shipping and receiving company after accusing UPS of “having misrepresented its profits because it failed to follow generally accepted accounting principles (GAAP) in valuing one of its worst-performing businesses.”

The charges stem from incidents in 2019 and 2020, in which the company was twice accused of violating GAAP rules relating to the carrying value of UPS Freight, its business unit responsible for shipping transportation representing less than a full truck.

As part of Friday’s agreement with the SEC, UPS will neither deny nor admit wrongdoing, which violated Sections 17(a)(2) and (3) of the Securities Act.

The company also promised not to commit the same violations in the future.

In 2019, the company was accused of valuing the UPS Freight business unit at $650 million if sold. However, the company failed to correctly calculate the value of goodwill associated with this unit.

Goodwill represents future economic benefits such as a potential sale and must be tested annually, according to a definition of Association of Chartered Accountants.

UPS’s accountants failed to record on its balance sheet that approximately $500 million of that $650 million valuation had been written down.

“Companies should perform impairment testing annually or whenever a triggering event causes the fair market value of goodwill to fall below its carrying amount.” reads an accounting definition of the term by the Corporate Finance Institute.

“Business assets must be properly valued at fair market value before testing for impairment. If goodwill has been evaluated and identified as impaired, the full amount of the impairment must be immediately written off as a loss. Impairment is recognized as a loss on the income statement and as a reduction in the goodwill account on the balance sheet.”

The company’s agreement with the SEC also includes a requirement to employ an independent compliance consultant to assess goodwill impairment.

“Goodwill balances provide investors with valuable information about how successful companies are in operating the businesses they own,” Melissa Hodgman, associate director of the SEC, said in the agency’s release.

“Therefore, it is essential that companies prepare reliable fair value estimates and write down goodwill when necessary. UPS has failed to meet these obligations, repeatedly ignoring its own well-founded sales price estimates for freight in favor of unreliable third-party valuations.”