Seven months before filing its annual report Remitly Global Inc. (RELY), a provider of cross-border remittance services to immigrants, disclosed the following regarding an out-of-period adjustment made in the second quarter of 2022:

“The Condensed Consolidated Financial Statements for the three months ended June 30, 2022 include an adjustment of $6.3 million to stock-based compensation expense and additional paid-in capital, to correct for an error identified by management during the preparation of the financial statements for the three months ended June 30, 2022.”

The $6.3 million correction included $1.9 million for the first quarter of 2022 with the remaining $4.4 million pertaining to prior fiscal periods.

Notably, the $1.9 million adjustment has now disappeared.

In its latest annual report, Remitly’s disclosure regarding the out-of-period adjustment is not consistent with the aforementioned admission made in August 2023:

“The condensed consolidated financial statements include an adjustment of $4.4 million to stock-based compensation expense and additional paid-in capital, to correct for an error identified by management during the preparation of the prior period’s financial statements for the three months ended June 30, 2022.”

No explanation is provided for the $1.9 million discrepancy.

In August 2023, when DuDil first began tracking the issue, Remitly’s Stephen Shulstein
confirmed the error totaled $6.3 million:

“We recorded a prior period adjustment of $6.3M in the second quarter of 2022 related to stock compensation expense in G&A. We disclosed this in our 2Q 2022 earnings release in footnote 2. $4.4M was related to 2021 and prior and $1.9M was related to 1Q22.”

The discrepancy also appears in Remitly’s quarterly filing prior to the annual report.

In addition to initially understating understating its operating loss, the missing $1.9 million is also:

—8.15% of G&A expense in the first quarter of 2022
—1.44% of G&A expense in FY22

In 2022, Remitly acknowledged control deficiencies related to the accuracy of stock-based compensation (SBC) expense.

Though $1.9 million in stock-based compensation expense is currently unaccounted for, Remitly’s latest annual report indicates the company’s internal controls over financial reporting are effective.

Notably, Remitly rewarded its auditor PwC with an 87.38% fee increase between 2021-22— the period in which the $6.3 million accounting error occurred— far outpacing sales growth during the same period of 42.49%.

As of August 30, 2023, DuDil confirmed no undisclosed active SEC enforcement investigation of Remitly’s accounting treatment of stock-based compensation.