Archer-Daniels-Midland Company (ADM, Financial) has announced the identification of additional misclassified intersegment transactions during the third quarter of 2024. These errors were discovered as part of the company's ongoing efforts to remediate previously identified material weaknesses in its financial reporting controls.
The misclassifications pertain to intersegment sales within ADM's Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition segments. Specifically, certain transactions were incorrectly reported as intrasegment sales instead of intersegment sales. Additionally, some transactions between Ag Services and Oilseeds and Carbohydrate Solutions were not consistently accounted for in line with revenue recognition and segment reporting standards.
ADM has assured stakeholders that these restatements are not expected to materially impact the company's Consolidated Statements of Earnings, Comprehensive Income (Loss), Balance Sheets, Cash Flow, or Shareholders’ Equity for the periods presented. The company is actively working to complete these restatements promptly, ensuring corrections for the newly identified errors and previously corrected errors related to intersegment sales.
To address these issues, ADM is enhancing its internal controls and financial reporting processes. This includes improving the design and documentation of pricing, measurement, and reporting controls for segment disclosure purposes. The company is also providing ongoing training for relevant personnel on the measurement of intersegment sales and the application of accounting guidance.
ADM's management, along with the Chair of the Audit Committee, has discussed these matters with the company's independent registered public accounting firm, Ernst & Young LLP, to ensure transparency and accuracy in financial reporting.
Should you invest in Archer-Daniels Midland Co (ADM, Financial) right now? Before you do it, it’s important to understand the business profitability and stock valuations, and find out what the warning signs are about. See the in-depth Archer-Daniels Midland Co (ADM) stock research here.
