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Cronos Accuses Senior Accounting Staffers of Misconduct
The revelation comes less than three months after the hemp company restated its financials.
May 10, 2022
In February 2022 we reported Cronos Group (CRON), a maker of hemp products, had forgotten to include a $234 million goodwill impairment charge on its financial statements in the three and six months ending June 30, 20221. The $234 million goodwill impairment— combined with multiple other adjustments— turned the originally reported $57 net profit for the quarter ending June 30, 2021 into a $179 million loss.
The company also lost track of its inventory, classified tax withholdings as income, and made an accounting error related to the accelerated vesting of certain restricted stock units (RSUs). Some of the mistakes go back as far as 2020. While the company acknowledged control deficiencies in its latest annual report, we're now learning more about why the errors were made— the company’s accounting department is a disaster.
In its latest quarterly filing, Cronos blamed the goodwill impairment error, and others, on senior accounting staffers and acknowledges the company:
“...did not ensure that senior personnel in our accounting function engaged consistently in appropriate professional conduct…”
Cronos says none of the personnel in the accounting function that engaged in misconduct were current or former executive officers. The company lists seven control deficiencies. None have been tested or remediated.
Related: TLRY, CGC, USNA, SNDL, ACB, HEXO, CDXC, IMCC, GRVI, NAII, GRWG
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