US conglomerate Kraft Heinz, the world’s fifth largest food and drinks company, has revealed it is under investigation by the Securities and Exchange Commission (SEC) over its procurement accounting policies and has had to make a $25m (£19m) adjustment to its fourth quarter results
In a statement Kraft Heinz said the SEC had raised concerns about the company's accounting policies, procedures, and internal controls related to its procurement function, including, but not limited to, agreements, side agreements, and changes or modifications to its agreements with its vendors. This led it to launch an investigation into the procurement area.
Kraft Heinz said: ‘In the fourth quarter of 2018, as a result of findings from the investigation, the company recorded a $25m increase to costs of products sold as an out of period correction as the company determined the amounts were immaterial to the fourth quarter of 2018 and its previously reported 2018 and 2017 interim and year to date periods.
‘Additionally, the company is in the process of implementing certain improvements to its internal controls to mitigate the likelihood of this occurring in the future and has taken other remedial measures.
‘The company continues to cooperate fully with the US Securities and Exchange Commission.’
Kraft Heinz said that it does not currently expect the matters subject to the investigation to be material to its current period or any prior period financial statements.
The food giant also reported a net loss of $12.7bn (£9.74bn) in its fourth quarter, having taken a $15.4bn impairment charge, and slashed its dividend.
Report by Pat Sweet