That may sound innocuous, but many companies have been burned doing just what RSA describes. It now only recognizes a sale once a product is sold to the end customer. It's unclear why the change wasn't communicated to investors in the quarterly press release or conference call. By staying quiet, management looks like it was misleading investors. Even after the news yesterday, investors have still been left out in the cold.
Many questions remain unanswered.
While RSA's accounting practices are completely legal, the new accounting method is a reminder that investors should look for ways companies can overstate earnings. Revenue recognition is a good place to start, and in the case of RSA its new policy increases the possibility of an earnings restatement down the road if deals fall through. Mike Trigg wishes all Memorial Day travelers a safe journey. His holdings can be viewed in his personal profile . The Motley Fool is investors writing for investors .