The accounting error was discovered when Green Mountain's management was preparing its fourth-quarter financial results. The company found that it had been overstating its consolidated inventory and understating its cost of sales relating to its Keurig business unit. That business unit handles Green Mountain's K-Cup inventory, according to its SEC filing.
SEC officials contacted Green Mountain early last week, saying Commission was conducting an inquiry and wanted various documents and information. Green Mountain says it believes regulators are focusing on how and when it accounts for its revenues and its relationship with one of its vendors that fulfills its orders.
For Green Mountain, the discovery of this error is occurring at an already busy time. Just two weeks ago, the company announced plans to acquire gourmet coffee roaster Van Houtte in an $891 million deal.