Green Mountain Coffee Roaster
During the fourth quarter of 2010 Green Mountain Coffee Roasters had some accounting irregularities become known to the public. Green Mountain’s problems all started from how they recognized income, though intercompany inventory and third party vendor. After the SEC inquiry, Green Mountain’s accounting irregularities spanned three fiscal years and three fiscal quarters. Starting with fiscal year 2007 and running through the third fiscal quarter of 2010.
In total Green Mountain had five areas of their financial statements in which they did not follow GAAP. The first issue overstated $7.6 million dollars of inventory during the time period, because of an
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The restating of their financial records has hurt their image but only for a little while since their stock has rebounded. “Channel Surfing” is what one blogger has accused Green Mountain of doing (Flitter, 2012). The inflation of sales and earnings is Channel Surfing; this is done to make a company seem more profitable than actual. The facts are that, yes they did go through an SEC inquiry for 18 months. There was no charges filed by the SEC and all Green Mountain did was restate their financial statement at an expense to the company’s bottom line. The company image does now have a blemish on it and they don’t have the same public support they once had. The stockholder did file a lawsuit against Green Mountain, but the judges throw the case out of court. Green Mountain had a net profit of $79 million in 2010 and $199 million in 2011, the years affected by the SEC investigation. Between the adjustment and cost of inquiry Green Mountain had a $14.1 million dollar expense. This is a big expense to the company but it is something they have recovered from and their stock is climbing and no one has gone to jail for criminal actions. Conclusion Green Mountain did not act like a responsible company in regards to its accounting practices, but they have straighten up there polices since the inquiry. I believe that they were