Kraft's former Chief Operating Officer Eduardo Pelleissone and its
former Chief Procurement Officer Klaus Hofmann were involved in
accounting fraud in the last quarter of 2015 to the end of 2018. They
maintained false and misleading supplier contracts, which improperly
reduced the company's cost of goods sold and allegedly achieved cost
savings. Earning management techniques is used by management to
produce financial information that present an overly positive view of
a company activities and financial activities and financial position.
Kraft Heinz COO and CPO manipulated the financial information
used by investors to make a good investing decision. Investors seek
to obtain information that will be useful to them in predicting the
future performance of the business.
In this case, Income Smoothing is technique used by Kraft Heinz COO
and CPO. This technique comes under fraudulent accounting as the
company records its expenses before it incurs or does not show the
profit and sales when earned. They can even accelerate the sales
showing extra revenue, or they don’t recognize bad debt in the
current year and shifts it to next year as it reduces this year’s profit.
Reference: https://www.shs-
conferences.org/articles/shsconf/pdf/2021/03/shsconf_glob20_020
60.pdf
Mintz, S., & Morris, R. (2013). Ethical obligations and decision making
in accounting (3rd ed.). New York, NY: McGraw-Hill.
