A former Disney employee has filed whistleblower tips with the Securities and Exchange Commission alleging that the company has overstated revenue for years in their parks and resorts segments.
Getty Images | Via MarketWatch
What’s happening:
- A new report on MarketWatch states that a former Walt Disney Company Employee has reportedly filed whistleblower tips with the Securities and Exchange Commission (SEC).
- The employee alleges that the company has “materially overstated revenue for years.”
- Sandra Kuba, is a former senior financial analyst with Disney and worked for the company for 18 years in their revenue-operations department.
- MarketWatch writes that Kuba filed tips with the SEC alleging that employees in the parks and resorts business segment “systematically overstated revenue by billions of dollars by exploiting weaknesses in the company’s accounting software.”
- MarketWatch notes that have reviewed Kuba’s filings which show ways that revenue was allegedly overstated.
- Kuba claims employees used the following methods to adjust revenue:
- Recording revenue for complimentary golf rounds or for free guest promotions.
- Recording revenue for $500 gift cards at face value that guests purchased for a discount at $395.
- Recorded revenue twice for gift cards: when purchased and then when used at a resort
- Sometimes revenue was recorded when a gift card was given to a guest for free
- Kuba’s allegations say that the accounting software had flaws making it difficult to trace when and where manipulation was taking place.
- She also claims that these alleged overstatements of revenue total significant amounts, saying that in 2008-2009 the company could have overstated as much as $6 billion.
- Disney denies Kuba’s allegations, saying that they reviewed the complaints and found them to be “utterly without merit.”
What they’re saying:
- Disney spokesperson regarding claims of overstating revenue: “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.”
- Disney’s 2017 response to investigation of Kuba’s termination: “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.”
- Jordan A. Thomas, a former attorney in the SEC’s enforcement division: “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.”