UPS will pay the US $45 million in compensation for misjudging its cargo division.

The Securities and Exchange Commission announced Friday that UPS will pay $45 million to settle allegations that it misvalued its freight division.

The regulatory agency said UPS materially misstated its earnings because it did not follow generally accepted accounting principles in valuing its freight units.

The SEC order said that UPS determined in 2019 that its freight division would likely sell the company for no more than $650 million. UPS’s own analysis found that nearly $500 million of goodwill associated with the unit was impaired.

But rather than use its own analysis, the SEC said UPS relied on an outside consultant’s assessment of its cargo division without providing the consultant with the information necessary to make a fair assessment of the business. The commission said the consultant used assumptions approved by UPS and then estimated that the freight cost was about $2 billion—three times what UPS had determined.

Goodwill impairment is a term used in accounting to recognize that the face value of an asset on paper exceeds its fair value.

The adviser estimated that UPS did not record any goodwill impairment in 2019, the SEC said. If UPS had valued the division correctly, its earnings and other reported items would have been substantially lower.

The SEC order also alleges that UPS entered into a non-binding agreement in 2020 to sell its freight division for $800 million, with adjustments to be made later that would likely lower the final price.

Despite its own analysis and inclusion of conditions, the Atlanta-based company again relied on a consultant’s 2020 assessment of the unit to avoid damaging the goodwill of the business. UPS also did not inform the consultant about the list of conditions, the commission said.

As it did last year, the Securities and Exchange Commission said that if UPS had correctly assessed its freight division and impaired goodwill, its earnings and other reportable items would have been materially lower.

“It is critical for companies to prepare reliable fair value estimates and reduce goodwill when necessary,” Associate Director Melissa Hodgman said in a statement. “UPS failed to meet these obligations by repeatedly ignoring its own reasonable estimates of the selling price of freight shipments. in favor of unreliable third party assessments.”

UPS shares rose more than 2% on Friday.

UPS said Friday that the settlement amount had been reserved and that it would not have a material impact on its business.