Michael Mendes Diamond Foods
March 7, 2012 by staff
Michael Mendes Diamond Foods, Daniel Acker/Bloomberg NewsThe Securities and Exchange Commission and the Justice Department are investigating accounting issues at Diamond Foods.
Investigations by the Securities and Exchange Commission and the Justice Department into accounting issues at Diamond Foods took on a new urgency after the company disclosed last week that it had put its chief executive, Michael J. Mendes, and chief financial officer, Steven J. Neil, on administrative leave over the accounting for expenses. The issue for Diamond Foods is no longer whether the government will find evidence of a violation, but how it will pursue enforcement actions under the range of remedies available.
The investigations center on payments of approximately $20 million in August 2010 and approximately $60 million in September 2011 to walnut growers who supply the company. The payments were proper, but the issue is which fiscal year they should have been accounted for as an expense.
Diamond Foods disclosed its audit committee determined that the payments “were not accounted for in the correct periods” and that its financial statements for the last two fiscal years “should no longer be relied upon.”
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