I have researched the Kraft Heinz Company for this discussion.
Management of KHC fraudulently altered supplier agreements to
recognize an immediate cost reduction which in term boosted the
gross profit margin. This is changing the timing of events because the
up front ‘savings’ wasn’t actually a savings because the KHC paid a
higher price later to make up for the lower price paid earlier. b
The COO, Eduardo Pelleissone, signed off on the financial
statements even though he was aware of the fraudulent transactions
that reduced costs because he was concerned of the impact if KHC
did not meet the aggressive earnings projections. This is a good
example of external expectations having influence on the way KHC
managed its earnings.
I also think window dressing applies here because Pelleissone was
concerned with how the strength of the company was perceived and
about earning his bonus.
References
Bergen, R. M., Solomon, M. C., Vicens, L., Lightbourne, J., &
Rosenblum, B. (2021, September 8). Two recent settlements highlight
heightened SEC focus on accounting fraud and potential benefits of
cooperation. Cleary Enforcement Watch. Retrieved September 18,
2022, from
https://www.clearyenforcementwatch.com/2021/09/two-recent-
settlements-highlight-heightened-sec-focus-on-accounting-fraud-
and-potential-benefits-of-cooperation/
Posner, C. (2021, September 16). SEC charges Kraft Heinz with
improper expense management scheme. The Harvard Law School
Forum on Corporate Governance. Retrieved September 18, 2022,
from https://corpgov.law.harvard.edu/2021/09/16/sec-charges-
kraft-heinz-with-improper-expense-management-scheme/
Press release. SEC Emblem. (2021, September 3). Retrieved
September 18, 2022, from https://www.sec.gov/news/press-
release/2021-174
