The Apollo Group (the parent company of the University of Phoenix) revealed in its annual disclosure report to investors that the Security and Exchange Commission’s (SEC) Enforcement Division is looking into its “revenue recognition practices.”

It looks like this has something to do with the way that the company counts financial aid dollars as revenue. Since they have to reimburse the federal government when a student receiving aid drops out, the company could be in some real trouble if SEC finds that they have not been subtracting the reimbursements properly when reporting their “revenue.”

This comes at the same time as a lawsuit against the company for questionable marketing practices. The suit, filed under the False Claims Act, alleges that the company owes the government billions of dollars for compensating recruiters based on the number of students that they enroll. This practice is illegal under US education law, and an important protection for students, who could be pressured into expensive programs that will not ultimately help them, and taxpayers, who often have to foot the bill. The University of Phoenix is the largest recipient of federal student loan dollars in the US.

The company now has 443,000 students, which makes it bigger than the entire California State University System.