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EIDP, Inc., a Delaware-incorporated company listed on the New York Stock Exchange under the tickers NYSE:CTAPrA and NYSE:CTAPrB, announced on Monday a significant restatement of its financial statements. The restatement concerns the incorrect classification of cash flows related to intercompany loan activities with its parent company, Corteva (NYSE:CTVA), Inc.
The misclassification, which originated in the fourth quarter of 2023, was discovered during a recent review of the company’s fourth-quarter 2024 financial results. EIDP’s management and Board of Directors, upon discovering the error, have determined that financial statements for the year ended December 31, 2023, and the subsequent quarterly reports for 2024 can no longer be relied upon. This includes unaudited consolidated financial statements for the quarters ending March 31, June 30, and September 30, 2024.
The restatement will correct cash outflows from loan activities that were mistakenly recorded under "Cash provided by (used for) operating activities - continuing operations" instead of the correct "Cash provided by (used for) investing and financing activities" section. The error did not impact the company’s Consolidated Statements of Operations, Balance Sheets, Comprehensive Income (Loss), or Statements of Equity for the periods in question.
The adjustments to the Consolidated Statements of Cash Flows will improve the "Cash provided by (used for) operating activities—continuing operations" by approximately $400 million for the year ended December 31, 2023, and by varying amounts for each subsequent quarter in 2024, with a corresponding decrease in "Cash provided by (used for) investing and financing activities."
EIDP Inc. acknowledged a material weakness in internal control over financial reporting due to ineffective controls for evaluating the appropriate cash flow classification of intercompany transactions. Consequently, the company concluded that it did not maintain effective internal control over financial reporting or disclosure controls and procedures as of December 31, 2023, and anticipates a similar conclusion for December 31, 2024.
The company is set to restate its consolidated financial statements for the affected periods in its upcoming Annual Report on Form 10-K for the year ended December 31, 2024, and expects to file the report on time. EIDP’s management, Board of Directors, and the Audit Committee of Corteva have discussed the misclassification with PricewaterhouseCoopers LLP, the independent registered public accounting firm for both EIDP and Corteva.
It is important to note that the misclassification was specific to EIDP’s standalone financial statements and did not affect the consolidated financial statements of Corteva, as intercompany transactions are eliminated in consolidation.
Furthermore, the misclassification did not impact Corteva’s internal control over financial reporting, nor did it affect the company’s compliance with debt covenants, management’s compensation, or result from intentional or fraudulent activity.
This news is based on a recent SEC filing by EIDP, Inc.
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