Former Disney Accountant Claims Company Has Inflated Revenue For Years


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According to a former senior financial analyst for The Walt Disney Company, employees in the Parks & Resorts division overstated revenues by billions of dollars using weaknesses in their accounting software.

Sandra Kuba, who worked in the revenue-operations department for 18 years, has met with officials from the Securities and Exchange Commission (SEC) and filed a series of “whistleblower tips” alleging that the practice has been going on for years.

When approached by MarketWatch, the SEC declined to comment, however a Disney spokesperson called the claims “utterly without merit.”

According to the filings, which MarketWatch reviewed, employees would boost revenue by recording sales for free guest promotions, like rounds of golf; record discounted gift cards at their face value; and even record revenue for gift cards twice, once when purchased and again when redeemed.

Flaws in the software, says Kuba, made the practice difficult to trace. Kuba alleges that in any one year, 2009-09 for example, revenue could have been overstated by up to $6 billion. MarketWatch points out that in 2009, the Parks & Resort division posted revenue totaling $10.6 billion.



Kuba says she reported the practice to management back in 2016, but no one responded to her. In 2016, she took the information to a higher senior executive, and was then contacted by Disney’s corporate audit group. Kuba says there was no follow-up from the initial contact.

In 2017, Kuba finally went to the SEC with her concerns. She says that Disney fired her a month later.

Following her termination, Kuba filed a whistleblower-retaliation complaint with the Occupational Safety and Health Administration (OSHA). In response to OSHA’s inquiry, Disney said that Kuba was fired because “she displayed a pattern of workplace complaints against co-workers without a reasonable basis for doing so, in a manner that was inappropriate, disruptive and in bad faith.”

Kuba continues to file complaints with the SEC, including as recently as June 2019, when she claimed that employees were reclassifying items to avoid sales tax liabilities in certain states.

In their full statement, Disney says:



“The claims presented to us by this former employee — who was terminated for cause in 2017 — have been thoroughly reviewed by the company and found to be utterly without merit; in fact, in 2018 she withdrew the claim she had filed challenging her termination. We’re not going to dignify her unsubstantiated assertions with further comment.”

According to an analyst that MarketWatch spoke to, the fact that the SEC continues to interact with Kuba suggests that they are taking her allegations seriously.

Jordan A. Thomas, a former attorney for the SEC told MarketWatch:

“The SEC receives more than 25,000 tips, complaints and referrals each year, and the vast majority do not make it this far. The fact that the SEC has asked for more information more than once and conducted interviews suggests an inquiry is underway.”

Source: MarketWatch



 


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