Nike 2020 10K

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts
or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Income Taxes

As described in Note 9 to the consolidated financial statements, the Company recorded income tax expense of $348 million
for the year ended May 31, 2020, and has net deferred tax assets of $732 million, including a valuation allowance of $26
million, and total gross unrecognized tax benefits, excluding related interest and penalties, of $771 million as of May 31,
2020, $536 million of which would affect the Company's effective tax rate if recognized in future periods. The Company is
subject to taxation in the United States, as well as various state and foreign jurisdictions. As disclosed by management, the
use of significant judgment and estimates, as well as the interpretation and application of complex tax laws is required by
management to determine its provision for income taxes.

The principal considerations for our determination that performing procedures relating to the accounting for income taxes is
a critical audit matter are the significant judgment by management when assessing complex tax laws and regulations,
including new temporary regulations and recent court rulings, as it relates to determining the provision for income taxes and
other tax positions. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and
evaluating audit evidence relating to the provision for income taxes and other tax positions. In addition, the audit effort
involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the
audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
the provision for income taxes and other tax positions. These procedures also included, among others, evaluating the effect
on the Company's tax provision of changes in its legal entity structure and tax laws, testing management's tax calculations
and considering the Company's compliance with tax laws. We also used professionals with specialized skill and knowledge
to assist in evaluating the application of relevant tax laws, the provision for income taxes and the reasonableness of
management's assessments of whether certain tax positions are more-likely-than-not of being sustained.