Youngevity’s accounting auditor quits over misrepresentations

Youngevity’s long-term monetary auditor has give up following considerations over supplied monetary knowledge.

Citing “info that has come to its consideration”, the agency Mayer Hoffman McCann has resigned as Youngevity’s accounting.

Mayer Hoffman McCann had been signing off on Youngevity’s filed monetary experiences since 2011.

What info Mayer Hoffman McCann have uncovered will not be disclosed in Youngevity’s October twelfth 8-Okay submitting.

What we do know is Mayer Hoff McCann haven’t any confidence in Youngevity administration.

The interior controls obligatory for Youngevity to develop dependable consolidated monetary statements don’t exist and that info has come to its consideration that has led Mayer Hoffman McCann to not be capable to depend on administration’s representations.

Data supplied by Youngevity of their 8-Okay submitting suggests there’s an issue with income reporting tied to inexperienced espresso value of gross sales.

Particularly, Youngevity representing that it owned espresso bought to H&H Export Y CIA. LTDA in Nicaragua in 2019.

Through the 2019 audit procedures, the Firm decided that the Firm didn’t personal the unprocessed inexperienced espresso previous to transferring the espresso to H&H and is due to this fact an agent and processor of inexperienced espresso on behalf of H&H.

This dedication meant that revenues on inexperienced espresso transferred to H&H ought to have been recorded at web (the added worth of the processing of the inexperienced espresso beans) fairly than at gross, as beforehand reported.

The Audit Committee, following discussions with administration, has decided that fairly than recognizing revenues and price of gross sales of inexperienced espresso to H&H on a gross foundation, the revenues and price of gross sales to H&H must be acknowledged on a web foundation reflecting the deduction of value of income associated to such income.

The change in accounting for the revenues and price of gross sales of inexperienced espresso to H&H from gross to web will not be anticipated to have any impression on the Firm’s web revenue/loss.

Consequently, Youngevity’s Audit Committee advises

unaudited condensed consolidated monetary statements for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019 contained within the Firm’s Quarterly Studies on Kind 10-Q beforehand filed with the SEC on Might 20, 2019, August 14, 2019 and November 18, 2019 ought to not be relied upon.

Equally, associated press releases, earnings releases, and investor communications describing the Firm’s unaudited condensed consolidated monetary statements for these durations ought to not be relied upon.

If I’m studying the submitting collectively, Youngevity has additionally misplaced $5.3 million to H&H.

The Firm additionally has just lately decided that the worth of the collateral underlying a promissory word, due November 2020, within the principal and curiosity quantity of $5.3 million, from H&H has been impaired, leading to an impairment allowance for $5.3 million.

Because of this, administration believes it’s greater than probably that the Firm won’t accumulate the excellent steadiness and curiosity due on the word receivable.

Based mostly on Youngevity’s representations of their submitting, that is remedied by submitting “restated condensed consolidated monetary statements”.

At first I’m not accountant. If Youngevity’s error was unintentional nevertheless, and all that’s wanted to be accomplished is refiling of economic experiences – why would Mayer Hoff McCann terminate a nine-year contract?

Anybody with accounting expertise in a position to weigh in and clarify what I is likely to be lacking?