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ADM Faces Justice Department Investigation Into Accounting

By Nithya Bose in Business News, posted March 13, 2024

Food processor Archer Daniels Midland (ADM) has confirmed it is under a Justice Department probe over its accounting practices.

The investigation came to light after ADM revealed the DOJ issued subpoenas to current and former employees.

In January, ADM announced it had placed its Chief Financial Officer, Vikram Luthar, on administrative leave.

This was after an internal investigation of accounting practices spurred by a Securities and Exchange Commission request.

ADM has made several adjustments to its previously reported financial results, acknowledging a notable decrease in quarterly sales and a significant drop in earnings compared to the previous year.

The internal review unearthed certain internal sales between business divisions were undervalued compared to market prices.

It prompted ADM to devise a remediation plan to address the discovered material weakness and enhance the reliability of its financial statements.

The company's financial adjustments affected its reports from 2018 to 2023.

It led to revised operating profits in its nutrition business and minor adjustments in its other main units.

Despite these changes, ADM maintained that its overall earnings were unaffected since the revisions were intersegment.

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With a substantial role in the global food supply chain and $94 billion in sales for fiscal year 2023, ADM experienced a downturn in its nutrition business, reflecting a 36 percent decrease in operating profit for 2023.

This downturn is partly attributed to reduced demand for plant-based food products.

In response to declining crop prices and fluctuating demand, ADM is taking strategic steps to streamline its nutrition business and enhance operational efficiency.

This includes narrowing its product offerings and consolidating production lines.

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