UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 98293 / September 6, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-21612

In the Matter of

JON ERIC BEST, 

Respondent.

ORDER INSTITUTING CEASE-ANDDESIST PROCEEDINGS, PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASEAND-DESIST ORDER 

I.

The Securities and Exchange Commission (“Commission” or “SEC”) deems it appropriate 

that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 

Securities Exchange Act of 1934 (“Exchange Act”) against Jon Eric Best (“Best” or 

“Respondent”). 

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over the Respondent and the subject matter of 

these proceedings, which are admitted, and except as provided herein in Section V, Respondent 

consents to the entry of this Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 

21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist 

Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1that 

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding. 
2

Summary

1. This matter stems from Best’s involvement in Fluor Corporation’s (“Fluor”)

percentage of completion (“POC”) accounting for a fixed-price construction project on which Fluor

served as the subcontractor and carried a risk of cost overruns with respect to work within the 

contract’s scope.

2. The project required Fluor to validate and complete the design and to build a one-ofa-kind U.S. Army facility for manufacturing nitrocellulose, an ammunition propellant, (“Radford” 

or the “Radford Project”). In 2015, Fluor submitted a bid on the Radford Project, relying on overly 

optimistic cost and timing estimates. Following the Radford Project’s subcontract award, Fluor 

experienced cost overruns that worsened over time. Fluor sought to recover these costs by 

submitting change orders, otherwise known as Project Change Notices (“PCNs”), to the customer.

3. For the fiscal year ended December 31, 2017 and the first quarter ended March 31, 

2018 (“Relevant Period”), Best, the then-Chief Financial Officer (“CFO”) of the Fluor Government 

Group (“FGG”), a segment of Fluor, with the input of other Fluor personnel, accepted revenue 

estimates based on unapproved PCNs that Best knew or should have known were materially 

overstated and approved the recording of the overstated revenue on Fluor’s books and records. The 

result was that the revenue kept the project forecast from a loss position.

4. Further, in support of the foregoing, Best, among others, participated in preparing 

documents required by Fluor’s internal accounting controls, which reflected overstated PCN 

revenue estimates. Best thereby was a cause of Fluor’s failure to maintain a system of internal 

accounting controls sufficient to account for the Radford contract in accordance with U.S. Generally 

Accepted Accounting Principles (“GAAP”). Best was also a cause of these failings that resulted in 

Fluor’s maintaining inaccurate books and records and ultimately in Fluor including materially 

misstated financial statements in periodic reports filed with the SEC for the fiscal year ended 

December 31, 2017 and the first quarter ended March 31, 2018. 

5. In August 2019, Fluor announced $714 million in pre-tax charges stemming from an 

“operational and strategic review” of sixteen projects, including Radford. Prompted by the SEC 

staff’s investigation, Fluor undertook an internal investigation in 2020 that identified material 

weaknesses in its internal control over financial reporting and material errors in its financial 

statements, and resulted in Fluor restating its annual and quarterly financial statements for its fiscal 

year 2016 through the third quarter of 2019, as disclosed in its 2019 Form 10-K filed with the SEC 

on September 25, 2020 (the “Restatement”). The material weaknesses identified in the Restatement 

were attributable in part to control failures associated with the Radford Project, which resulted in 

material errors. Throughout the Relevant Period, Fluor’s accounting issues on Radford resulted in 

materially overstated net earnings in Fluor’s reported financial statements. Fluor overstated its

annual net earnings by $38 million (25%) in 2017, and understated its net loss by $8.7 million 

(33%) in the first quarter of 2018.
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6. As a result of conduct detailed herein, Best was a cause of Fluor’s violations of

Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 13a-1, 13a-13, and 

12b-20 thereunder.

Respondent

7. Jon Eric Best, age 55, is a resident of Simpsonville, South Carolina. During the 

Relevant Period, Best served as Vice President, CFO of FGG until June 1, 2018, when he became 

Senior Vice President for Financial Planning & Analysis of Fluor. He left Fluor in November 

2019. He has never been licensed as an accountant or registered with the Commission in any 

capacity.

Relevant Entity

8. Fluor Corporation is a Delaware corporation with its principal place of business in 

Irving, Texas. Since registering its common stock with the SEC under Section 12(b) of the 

Exchange Act in 2000, Fluor has been required to file periodic reports on Forms 10-K and 10-Q 

with the SEC pursuant to Section 13(a) of the Exchange Act and related rules thereunder. During 

the Relevant Period, the stock traded on the New York Stock Exchange under the ticker symbol 

“FLR.” Fluor performs engineering, procurement, and construction services worldwide and

operates through business segments, including FGG.

Background

9. Under GAAP, Fluor accounted for its fixed-price projects using the POC method, 

whereby it was required to periodically recognize the project’s costs as incurred and the revenue as 

a percentage of the work completed to date. Under this method, for each reporting period, a 

project team develops dependable estimates of expected total revenues, total costs, and total project 

gross margin (“PGM”) to arrive at a project’s financial forecast (known as the Estimate at 

Completion or “EAC”). A project must recognize the entire amount of an anticipated loss as soon 

as the loss becomes evident.

10. To periodically record a project’s EAC, Fluor required use of the Project Margin 

Analysis Report (“PMAR”), which should document project management’s most likely current 

estimate of the project’s revenue, cost, and PGM forecast and use of a PMAR review checklist to 

“provide adequate assurances that project forecasts are best estimates in accordance with GAAP.”

Fluor’s internal accounting controls required that project management approve the PMAR; that

Best, as segment CFO, and other segment personnel sign the PMAR review checklist quarterly, 

and, along with two other segment officers, sign sub-certifications to corporate-level management

with each signer representing that, “to the best of our knowledge and belief,” the project forecasts

represent management’s best estimate, and are in compliance with the applicable GAAP and 

Fluor’s policies.
4

Radford Project

11. In December 2015, Fluor finalized a $245 million fixed-price subcontract with its 

customer (“Customer”) for the Radford Project to validate and complete the design and to build the 

project. As part of the scope of work, Fluor was provided an incomplete design from the prior, 

terminated subcontractor (“Prior Design”) that it was required to validate and complete.

12. During the Relevant Period, the difference between the subcontract price and the 

anticipated total cost of the Radford Project grew significantly as delays and cost overruns 

worsened. For the periods of year-end 2017 and the first quarter of 2018, Fluor personnel sought 

to address the growing anticipated total cost over the original subcontract price through the use of 

PCNs to recover these additional costs. PCNs are proposed modifications of a contract that change 

the price or scope of work of the contract, or both. The subcontract prescribed a process for 

submitting PCNs in appropriate circumstances. Fluor personnel developed PCNs for submission

to the Customer for approval. 

13. Through fiscal year-end 2017, Fluor was required to record revenue for unapproved 

PCNs under POC accounting in compliance with ASC Subtopic 605-35, Construction-Type and 

Production-Type Contracts (“ASC 605-35”), and could only record it if recovery of the additional 

revenue was deemed probable. Under ASC 605-35, the PCN should be evaluated as a “claim” if it 

was a change order in dispute, or unapproved as to both scope and price. A claim under ASC 605-

35 required a heightened level of evidence to demonstrate probable recovery. 

14. However, for the fiscal year ended December 31, 2017, Best reviewed and 

approved the categorization of the PCNs as unpriced change orders, instead of claims, even though 

the relevant PCNs were either in dispute, or were unapproved as to price and scope, and included

the PCNs in the revenue forecast when there was insufficient evidence to support that the PCNs 

were probable of recovery. 

15. For the fiscal year ended December 31, 2017, Best, with others’ input, approved the

inclusion of forecasted additional revenue from the unapproved PCNs, including rejected and not 

yet submitted PCNs, in the EAC based on an assumed recovery rate of 100% of the PCNs’ cost 

component. As a result, this revenue offset the additional forecasted costs and minimized the

adverse impact on the PGM. Fluor assumed an incorrect 100% recovery rate on the cost

component of the PCNs despite its actual rates of recovery on PCNs being low, as reflected below:

Radford Project 4Q 2017 1Q 2018

Unapproved PCNs in revenue forecast, net of profit fees $47M $68M

Assumed recovery rate of net PCN revenue in revenue forecast 100% 100%

Percent of total PCN revenue actually approved by Customer 4.5% 3.9%

16. Just after the year-end 2017, Best signed the PMAR review checklist specific to 

Radford erroneously stating that the project forecast revenue, costs, and PGM were best

estimates in accordance with GAAP.
5

17. Subsequently, as part of the preparation of the 2017 year-end financial statements, 

Best was tasked by senior Fluor financial personnel with overseeing, with the involvement of 

relevant Fluor personnel, the process of preparing documentation to support the Radford 

accounting for year-end 2017. This control activity’s objective was to document the facts and 

analysis supporting revenue estimates on a project with significant risks and judgments, in 

accordance with GAAP. Yet, this documentation, which Best participated in generating with input 

from others, and signed along with two other FGG personnel responsible for the Radford Project,

failed to support sufficiently that recovery of the unapproved PCNs from the Customer was 

probable. The documentation stated that Fluor was entitled to payment because the Customer

misrepresented the status of the Prior Design. But, it was not probable under GAAP that Fluor 

would recover money from the Customer to pay for the delays and design issues underlying the 

majority of PCNs at the assumed 100% recovery rate. Rather, throughout the Relevant Period, 

the Customer rejected many PCNs, blamed Fluor for the design problems, and maintained that 

Fluor was responsible for the additional costs under the terms of the existing fixed-price contract. 

18. Best, in his capacity as CFO of FGG, along with two other segment personnel,

signed the sub-certification to Fluor’s Chief Executive Officer (“CEO”) and CFO, for the year 

ending December 31, 2017, representing “to the best of his knowledge and belief” that, among 

other things, the financial information was presented in conformity with GAAP, that change 

orders unapproved as to scope, price, or both, had been recorded in accordance with ASC 605-

35, and that all project forecasts represented management’s best estimate of Fluor’s financial 

results, when he knew or should have known that the financial estimates caused materially 

overstated revenue to be recorded on Fluor’s books and records. 

19. In the first quarter of 2018, Fluor adopted ASC 606, Revenue from Contracts with 

Customers (“ASC 606”), which superseded the revenue recognition requirements in ASC 605.

Under ASC 606, Fluor could only include the unapproved PCNs in the revenue forecast if Fluor 

had an enforceable contractual right to additional revenue beyond the fixed contractual price, 

considering all relevant facts and circumstances, including the terms of the contract. 

 

20. Best, with others’ input and involvement, continued to approve of the inclusion of 

forecasted additional revenue in the first quarter of 2018, while lacking sufficient evidence of an 

enforceable right to the PCNs to support recording such revenue. As such, it was improper under 

GAAP to include revenue from the unapproved PCNs in the forecast.

21. Best signed a PMAR review checklist specific to Radford for the first quarter of 

2018, stating erroneously that the project forecasted revenue, costs, and PGM were best 

estimates in accordance with GAAP. Best also signed a sub-certification to Fluor’s CEO and 

CFO, for the quarter ending March 31, 2018, with the same representations as the prior subcertification, but under ASC 606. 

22. The conduct described above resulted in inaccurate books and records in reporting 

periods from year-end 2017 and the first quarter of 2018. Best was a cause of Fluor improperly 

including revenue for Radford unapproved PCNs in the total revenue forecast totaling $47.1

million for 2017 and $68.0 million for first quarter of 2018, which were included in financial 
6

statements in the Form 10-K for fiscal year ended December 31, 2017 and the Form 10-Q for the

first quarter ended March 31, 2018, respectively. As a result of the correction of these errors in the 

Restatement, revenues recognized for Radford were reduced by $19.3 million for 2017 and by 

$10.1 million for first quarter of 2018. 

Violations

23. As a result of the conduct described above, Best was a cause of Fluor’s violations 

of Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 12b-20 thereunder. Section 

13(a) of the Exchange Act requires issuers with a class of securities registered pursuant to Section 

12 of the Exchange Act to file such periodic and other reports as the Commission may prescribe 

and in conformity with such rules as the Commission may promulgate. Exchange Act Rules 13a-1 

and 13a-13 require the filing of annual and quarterly reports, respectively. The obligation to file 

such reports embodies the requirement that they be true and correct. See, e.g., SEC v. Savoy Indus., 

Inc., 587 F.2d 1149, 1165 (D.C. Cir. 1978), cert. denied, 440 U.S. 913 (1979). In addition to the 

information expressly required to be included in such reports, Rule 12b-20 of the Exchange Act 

requires issuers to add such further material information, if any, as may be necessary to make the 

required statements, in the light of the circumstances under which they are made not misleading.

24. As a result of the conduct described above, Best was a cause of Fluor’s violations 

of Section 13(b)(2)(A) of the Exchange Act, which requires an issuer of a security registered 

pursuant to Section 12 of the Exchange Act to make and keep books, records, and accounts which, 

in reasonable detail, accurately and fairly reflect the issuer’s transactions and disposition of assets. 

25. As a result of the conduct described above, Best was a cause of Fluor’s violations 

of Section 13(b)(2)(B) of the Exchange Act, which requires an issuer of a security registered 

pursuant to Section 12 of the Exchange Act to devise and maintain a system of internal accounting 

controls sufficient to provide reasonable assurances that: transactions are executed in accordance 

with management’s general and specific authorization; transactions are recorded as necessary to 

permit preparation of financial statements in conformity with GAAP or any other criteria 

applicable to such statements, and to maintain accountability for assets; access to assets is 

permitted only in accordance with management’s general or specific authorization; and the 

recorded accountability for assets is compared with the existing assets at reasonable intervals and 

appropriate action is taken with respect to any differences. 

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 

committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), and 

13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. 
7

B. Respondent shall, within 10 business days of the entry of this Order, pay a civil 

money penalty in the amount of $15,000 to the Securities and Exchange Commission. If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 

Payment must be made in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying Jon 

Eric Best as a Respondent in these proceedings, and the file number of these proceedings; a copy 

of the cover letter and check or money order must be sent to Carolyn M. Welshhans, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549

C. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is 

created for the penalties referenced in paragraph B above. This Fair Fund may be combined with 

the Fair Fund created in In the Matter of Fluor Corporation, AP File No. 3-21610. Amounts 

ordered to be paid as civil money penalties pursuant to this Order shall be treated as penalties paid 

to the government for all purposes, including all tax purposes. To preserve the deterrent effect of 

the civil penalty, Respondent agrees that in any Related Investor Action, he shall not argue that he 

is entitled to, nor shall he benefit by, offset or reduction of any award of compensatory damages by 

the amount of any part of Respondent’s payment of a civil penalty in this action (“Penalty Offset”). 

If the court in any Related Investor Action grants such a Penalty Offset, Respondent agrees that he

shall, within 30 days after entry of a final order granting the Penalty Offset, notify the 

Commission's counsel in this action and pay the amount of the Penalty Offset to the Securities and 

Exchange Commission. Such a payment shall not be deemed an additional civil penalty and shall 

not be deemed to change the amount of the civil penalty imposed in this proceeding. For purposes 

of this paragraph, a “Related Investor Action” means a private damages action brought against 

Respondent by or on behalf of one or more investors based on substantially the same facts as 

alleged in the Order instituted by the Commission in this proceeding.

V.
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It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Respondent under this Order or any other judgment, order, consent order, decree 

or settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Respondent of the federal securities laws or any regulation or order issued under such laws, as set 

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).

By the Commission.

Vanessa A. Countryman

Secretary