Kraft Foods Settles With the SEC Over Misstatements in Their Financial Reports for $62 Million
Recently, the SEC announced a settlement with Kraft Foods for $62 million and with two Kraft executives for financial reporting misstatements. Along with the corporate settlement with Kraft, the SEC announced proposed settlements with Kraft’s former COO Eduardo Pelleissone and its former Procurement Officer Klaus Hoffman for their roles in the reporting fraud.
During the period of 2015 to 2018, Kraft committed various accounting misconduct, including recognizing unearned discounts from suppliers and maintaining false and misleading supplier contracts, in an attempt to improperly reduce cost of goods sols though claimed “cost-savings.” As a result, Kraft reported inflated adjusted EBITDA based on these false cost savings. After conducting a thorough investigation and re-audit, Kraft restated its financial statements, correcting a total of $208 million in improperly recognized costs savings connected to almost 300 transactions.
