Former Disney Accountant Files Whistleblower Tips to SEC Alleging Overstatement of Revenue

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Marketwatch.com is reporting that a former Disney financial analyst by the name of Sandra Kuba has met with officials from the SEC on several occasions to discuss allegations made against the Walt Disney Company.

Kuba was terminated with cause from the company in 2017 after working for 18 years in the operations department as a financial analyst. She alleges that employees working in the parks and resorts area of the company systematically overstated revenue by as much as $6 billion due to weaknesses in the company’s accounting software.

Kuba’s filings allege that employees would report fictitious revenue for complimentary items like gift cards, promotions and rounds of golf. Additionally, she alleges that discounted $500 gift cards (sold for $395) were accounted for at face value. Furthermore, she alleges that employees would regularly count revenue from gift cards at the purchase of the gift card and again at the redemption.

The filing cites the flaws in the accounting software and suggests that in 2008-2009 the annual revenue may be overstated by as much as $6 billion. The 2009 total parks and resorts revenue was $10.6 billion.

Kuba brought her claims to the SEC in August 2017 and was fired from Disney roughly one month after her claims. Disney stated her termination was 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.” In October 2017 she filed a complaint with the Department of Labor’s Occupational Safety and Health Administration.

Kuba has made two additional whistleblower filings including one in June of 2019. The most recent claim alleges that Disney employees reclassified guest revenue from high-sales-tax items such as hotel rooms to lower-taxed items such as food and beverages. The effect of this would reduce state tax liabilities in Florida, California and Hawaii.

The Disney spokesperson said: “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.”

An SEC spokeswoman declined to comment on the article.

Source
www.marketwatch.com

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