Diamond Food to Restate Financial Statements

Diamond Foods to Restate Financial Statements

Jen DeSimio

ACC/537 Financial Accounting

October 23, 2012

David Neil

Diamond Foods is the parent company to many of the snack foods we eat such as Kettle(R) Chips, Emerald(R) snack nuts, Pop Secret(R) popcorn, and Diamond of California(R) nuts. You can find their products in many stores nationwide. However after an internal audit committee completed their examination it was found that the financial statements for Diamond Foods in 2010 and 2011 did not accurately portray the company’s earnings. Diamond Foods made payments to growers in 2010 and 2011 but they did not account for those payments in that period.   It is assumed that large payments were made to growers to secure future inventory however there was not any plan to actually deliver the goods. Since these payments were not accounted for in the correct period net income was overstated which understated cost of goods sold.
This unethical behavior caused many changes to Diamond Foods staring with the termination of the CEO and CFO. The SEC is investigating the company and although it does not mean any laws were broken it is causing problems with the company’s acquisition of Pringles. In December 2011 Diamond Foods missed their quarterly filing deadline with the SEC which caused a delay in the investigation of the company’s payment practices.   Diamond Foods stock dropped by 6% once news of the SEC investigation came out.
This all started in December 2011 and just this week Diamond Foods interim According to "Yahoo Finance" (nd), " CFO Mike Murphy stated "Our finance team has been working diligently to complete its preparation of restated consolidated financial statements for fiscal years 2010 and 2011, and to finalize quarterly condensed consolidated financial statements for fiscal 2012," "We are nearing the point of completion and look forward to being in a position to file our restated results."...