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Disney whistleblower told SEC the company inflated revenue for years
A former Walt Disney Co. accountant says she has filed a series of whistleblower tips with the Securities and Exchange Commission alleging the company has materially overstated revenue for years.
Sandra Kuba, formerly a senior financial analyst in Disney's revenue-operations department who worked for the company for 18 years, alleges that employees working in the parks-and-resorts business segment systematically overstated revenue by billions of dollars by exploiting weaknesses in the company's accounting software.
[...] A Disney spokesperson said the company had reviewed the whistleblower's claims and found that they were "utterly without merit."
Kuba's whistleblower filings, which have been reviewed by MarketWatch, outline several ways employees allegedly boosted revenue, including recording fictitious revenue for complimentary golf rounds or for free guest promotions. Another alleged action Kuba described in her SEC filing involved recording revenue for $500 gift cards at their face value even when guests paid a discounted rate of $395.
[...] Kuba's filing alleges that flaws in the accounting software made the manipulation difficult to trace, though the consequences could be significant. In just one financial year, 2008-09, Disney's annual revenue could have been overstated by as much as $6 billion, Kuba's whistleblower filing alleges. The parks-and-resorts business segment reported total revenue of $10.6 billion in 2009, according to its annual report filed with the SEC.
Also at Deadline and Bloomberg.
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(Score: 2) by All Your Lawn Are Belong To Us on Friday August 23 2019, @05:03PM (2 children)
Goodwill.
Only if they're using cash-based accounting. Seriously (no joke) they are probably using accrual-based accounting which lets them count the income when it becomes a receivable and not when the actual cash is deposited (cash-based accounting). Then the accrued receivable is transferred (at a discount) to an offshore holding facility. Payment is made offshore and a lower tax rate is paid to..... wherever.
Of course. The shenanigans at Enron wasn't a corporate problem either but only individuals. ;)
This sig for rent.
(Score: 3, Interesting) by All Your Lawn Are Belong To Us on Friday August 23 2019, @09:18PM (1 child)
Should have also said that what was being accused here wasn't what I said, but it almost certainly utilized accrual accounting for part of it. From TFA:
In the first paragraph (not the second) all of those actions can be covered on accruals that either do or don't receive a counter-expense. For example, give away a complimentary golf round and then write the income off against expenses to goodwill or customer relations, or even bad debt (although writing off income you knew you never would receive to a bad debt is shady as that posits you knew it was bad debt beforehand). If that's what this was, not surprised that it doesn't have a lot of merit as AFAIK that's perfectly legal. Booking the income from a discounted gift card and then expensing the $105 to promotions.... If one is on accrual accounting I find it hard to understand the problem. Yes, Disney would show higher incomes than what cash came in but they also record expenses of the lost income of the discount (or whatever). The trick would be those do not have be recorded in the same period. Yet it's not particularly odorous. Investors should understand such basics. (Empahsis should...)
This sig for rent.
(Score: 0) by Anonymous Coward on Saturday August 24 2019, @08:37AM
and then claim you have billions coming in? how much is real?