Ethical Accounting

Following both letter and spirit of accounting standards.

Cawan's Shoes accounting-policy choices — deliberately conservative: • R&Dⓘ: 100% expensed as incurred ($25M in 2025), even though a portion could be capitalized under IFRS IAS 38. • Inventory: lower of cost or net realizable value, aggressive markdown reserve = 4.2% of ending inventory ($2.1M), reviewed monthly. • Revenue recognition: net-of-returns method; historical return rate 8.4% booked as contra-revenue at point of sale, not at return. • Stock-based comp: full grant-date fair value, no non-GAAP add-back in board presentations. • Internal audit: 6-person team reports to Audit Committee (not CFO); rotates through every business unit every 24 months. • Whistleblower hotline (Navex): 34 reports in 2025, 4 substantiated, 2 terminations. Trend reviewed by Audit Committee.