Question: 1. One of the red flags identified in the case was that operating cash flow increases did not seem to match the level of increase

1. One of the red flags identified in the case was that operating cash flow increases did not seem to match the level of increase in net income. Explain the relationship between these two measures and why it raised questions about the quality of earnings at Diamond Foods.
2. Why were the actions of Diamond Foods with respect to its ‘accounting for nuts’ unethical?
3. The role of Deloitte & Touche is unclear in the case. We do not know whether the firm identified the improper accounting for the payments to walnut growers and periods used to record these amounts. Assume that the firm identified the improper payments and discussed the matter with management (i.e., CFO and CEO). What levers might Deloitte use to convince top management to correct the materially misstated financial statements?

Step by Step Solution

★★★★★

3.36 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

1 When sales are made the company either receives cash or a promise to pay in the future normally through accounts receivable As the accounts receivab... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

376-B-O-B-B-E (976).docx

120 KBs Word File

Students Have Also Explored These Related Organizational Behavior Questions!

Chief Bryan Jenks has a problem. Many car burglaries are occurring in his town, in alleys. The mayor is up for reelection, and the community is demanding action. They want the burglars arrested and...

What are some of the red flags that would suggest that the overall financial attractiveness of a proposed new venture is poor? Which of the red flags you identified would suggest that realistically,...

1 One of the required elements of proof to establish a violation of the Federal False Claims Act is that the claim must have been made knowingly Please discuss in detail what the courts mean by the...

Is there any relationship between these two variables? To find out, we randomly selected 12 people from a data set constructed by Allen Shoemaker (Journal of Statistics Education) and recorded their...

Capital Budgeting Assignment FNCE 301 Fall 2020 Toefield Inc. has developed a powerful efficient snow remover that is significantly less polluting than existing snow removers currently on the market....

Plastic Technologies Inc. has developed a 3D printer that is significantly more precise than existing 3D printers on the market. The company spent $1,000,000 on Research & Development for this...

Devon Inc. has developed a powerful efficient snow blower that is significantly less polluting than existing snow blowers currently on the market. The company spent $ 2 , 5 0 0 , 0 0 0 developing...

Diamond Foods, based in Stockton, California, is a premium snack food and culinary nut company with diversified operations. The company had a reputation of making bold and expensive acquisitions. Due...

Cash Flows From Working It may surprise you that there are cash flows associated with holding a job. Using the examples provided in Chapter 6, construct a simple cash flow statement and payback...

Need detailed SWOT Analysis Of this Case. & 500 Words Overview. STATEMENT OF CASH FLOWS: PREPARATION, ANALYSIS & LINKAGES How was Lucky Cement Limited Company able to invest Rs. 5.6 billion in a...

Diamond Foods: Accounting for Nuts Diamond Foods, based in Stockton, California, is a premium snack food and culinary nut company with diversified operations. The company had a reputation of making...

Refer to Exercise 61. Which, if any, of the following factors would force you to change your answers? For each of the factors listed, discuss your reasoning. (Consider each part independent of the...

Prepare for class a three-minute presentation on one of the seven tools of quality control

Use a n appropriate substitution and then a trigonometric substitution t o evaluate the integral. 0 l n 3 e t d t e 2 t + 1 6 2 Which substitution transforms the given integral into one that can b e...

The board of directors of Jonas Chemical Systems Limited has used payback for many years as an initial selectionrn tool to identify projects for subsequent and more detailed analysis by its financial...

Sun company has outstanding a 10 percent bond issue with a face of $1,000 per bond and three years to maturity. Interest is payable annually. The bonds are privately held by Fire Insurance Company....

An element X forms both a trifluoride, XF, and a pentafluoride, XF,. When 6.000 g of XF, are converted into the pentafluoride, 7.728 g of XF, are obtained. What is the identity of the element X?

calculate the percentage price change of a bond for a specified change in benchmark yield, given the bonds effective duration and convexity

What are Barry's ethical obligations in this case? Include in your discussion the issues of concern from an audit perspective and why they should be of concern to Barry in deciding what to do?

Assume you are Barry's best friend and he asks for your advice. What would you tell Barry and why? Use ethical reasoning in developing the advice.

Use the fraud triangle to analyze the business and audit risks that existed at Diamond Foods during the period of its accounting fraud?

If D1=$1.25, g(which is constant)=4.7%, and P0=$29.00, whats the stocks expected dividend yield for the coming year?

Prices of zero-coupon bonds reveal the following pattern of forward rates: Year Forward Rate points In addition to the zero-coupon bond, investors also may purchase a 3-year bond making annual...

Touring Enterprises, Inc., has a capital structure consisting of $18 million in long-term debt and $7 million in common equity. There is no preferred stock outstanding. The interest rate paid on the...