lazyboy97o
Well-Known Member
Would it have to be something deliberate? Could it not just be a culture of conformity and poor practices?
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Ex-Disney accountant alleges major accounting fraud in parks and resorts division
- Thread starter Slpy3270
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danv3
Well-Known Member
Was going to say the same. NDAs don’t prohibit making reports of alleged violations of law to government agencies.
cosmicgirl
Well-Known Member
IF 2008-2009 was in fact overstated by $6 billion and they officially reported $10.6 billion, then the actual revenue would have been $10.6B - $6B = $4.6B. $10.6B / $4.6B = 230%. Granted, I rounded the $10.6B down to $10B to get the 250% but that doesn't change much on the scale of things.
But honestly, I'm a bit shocked I have to explain this to someone in finance at a Fortune 10.
For the record, I'm not saying it's true (or false!) but the mini golf thing in the article made me laugh because of the receipt. I'm intrigued!
The more I read about this story and how it is directed solely at the parks, the more I believe there is nothing to the story that will hurt the company as a whole. She said that parks are over reporting revenue and that this comes from gift cards. For accounting purposes, think of gift cards as deferred revenue. The sale and profits can't be counted until an actual item or service is sold. Therefore the Giftcard is kept on the book as a liability and the money as an asset. This is all perfectly understandable until you count the discount and cost of the sale. Also sometimes Disney gives giftcards away. This is what I believe she is talking about.
Does the sales expenses get applied to the final sale or some overhead elsewhere? She is claiming the sale expense should be applied to the parks revenues. Why I disagree with here is the giftcards can be used at any Disney Division. I know lots of DVC members who buy Disney Giftcards at Target and use them to pay their DVC dues. Others use them to pay for their vacations and purchases. They can also be used at Disney Stores and actually for as ny purchase from anystore in Disney Springs. Of course there are many giftcards which are never used and the money is either kept by Disney or turned over to the State depending on which state the giftcards were sold in. So where does that expense get applied? I believe a separate account where all giftcard revenues snd expenses are applied.
Profits, interest and revenue from lost cards should be kept here as should expenses, the discounts for selling them. If a hotel or other location issue a giftcard for free to a customer, that Division should be charged the full value of the card. Most likely it would be a hotel. Now any net profit or loss would be charged or credited to overhead.
Now getting back to her claim and Disney's response. They both can be right because they could easily be talking across from each other and not listening to the exact words. That happens all too often on the boards here as well as all across society. Her claims that Disney over states parks revenue because of the giftcards is true because people buy their own discounts. However she is wrong because she does not include the interest earned carrying the money and the cards that are never redeemed. Over the number of years she is talking about, the amount of money coukd easily be several billion dollars but it would have no affect on total Company profits and nowhere is any of the stories I have read does she talk about anything other than revenue.
Does the sales expenses get applied to the final sale or some overhead elsewhere? She is claiming the sale expense should be applied to the parks revenues. Why I disagree with here is the giftcards can be used at any Disney Division. I know lots of DVC members who buy Disney Giftcards at Target and use them to pay their DVC dues. Others use them to pay for their vacations and purchases. They can also be used at Disney Stores and actually for as ny purchase from anystore in Disney Springs. Of course there are many giftcards which are never used and the money is either kept by Disney or turned over to the State depending on which state the giftcards were sold in. So where does that expense get applied? I believe a separate account where all giftcard revenues snd expenses are applied.
Profits, interest and revenue from lost cards should be kept here as should expenses, the discounts for selling them. If a hotel or other location issue a giftcard for free to a customer, that Division should be charged the full value of the card. Most likely it would be a hotel. Now any net profit or loss would be charged or credited to overhead.
Now getting back to her claim and Disney's response. They both can be right because they could easily be talking across from each other and not listening to the exact words. That happens all too often on the boards here as well as all across society. Her claims that Disney over states parks revenue because of the giftcards is true because people buy their own discounts. However she is wrong because she does not include the interest earned carrying the money and the cards that are never redeemed. Over the number of years she is talking about, the amount of money coukd easily be several billion dollars but it would have no affect on total Company profits and nowhere is any of the stories I have read does she talk about anything other than revenue.
But if that were the case then Disney would have already issued the standard, these are the accusations of a disgruntled former employee. If Disney doesn't do that then the probability of the accusations being true goes way up.
the_rich
Well-Known Member
They did already. I posted it earlier in this thread.
But that would also mean that the net income was inflated which the accountant isn't alleging.
I suppose they might not be impacting the bottom line if they are reducing revenue equally at some other place. In which case I suppose you might try some monkey business like that if it was intended to try and avoid taxes at some state level. Where I suppose you could try and make the business activity in a state with lower taxes appear to the place where you were making more money while lowering the profits you were making in another state that had higher taxes... but in the end I'm more inclined to think some mid level managers might have been trying to hide their failures. I have seen lots of instances in companies I've worked for where some idiots would try to inflate things in their operating unit, it never worked for long... but desperate people will do desperate things.
Okay... must have missed that post.
Disney4family
Well-Known Member
They're already out and dancing to unusually happy tunes on the castle in some bizarre version of pseudo-"Halloween" fireworks.
the_rich
Well-Known Member
“This former employee, who was fired for cause, has persistently made patently false claims for over two years,” the statement said. “The claims she made to the company were thoroughly investigated and found to be utterly baseless. It is unfortunate that MarketWatch, which has been aware of the facts for months, knowingly and deliberately chose to give Ms. Kuba’s unfounded claims a platform
Epcot_Imagineer
Well-Known Member
I've been on these forms too long... I searched for @marni1971's post explaining if this were real or not.
Not sure why it took me a solid couple minutes to realize that while he knows things about new attractions, he would not know about a company wide accounting conspiracy.
Not sure why it took me a solid couple minutes to realize that while he knows things about new attractions, he would not know about a company wide accounting conspiracy.
LSLS
Well-Known Member
So a couple things to clear up. First, it is not JUST giftcards. That was simply the one example stated in the article. They discuss there are multiple actions. Second, it's not a former employee going after them. She states she contacted the SEC in August, a month before she was fired (believe what you will on that, I don't have the documents, etc.).
Again, I'm on record here as saying I'd be floored if this was true, but this is not something she brought AFTER being fired, nor something on JUST giftcards.
Again, I'm on record here as saying I'd be floored if this was true, but this is not something she brought AFTER being fired, nor something on JUST giftcards.
Dead2009
Horror Movie Guru
Also in the story was rounds of golf. Not mentioned were free meals but I think they would fall under what she is talking about. Since she never said, or at least none of the stories I have read, that Disney overstated income. Thus all she is talking about is revenue and expenses. This would be dollar for dollar. She is saying Disney overstated both by billions over about 18 years. Why? If they had lower revenues and expenses their profit margin would be higher. I thought that is one of the metrics Wall Street loves. No, this all comes down to where the expenses and revenues get applied. This is a none story but when added to the other crap going on, I wonder if there is something more sinister going on. Is it just a coincidence that these two stories came out so close together? Will another story come out this week? Is someone doing something illegal? Something just doesn't look right.
the_rich
Well-Known Member
The only thing I could find was for 2017. Disney recorded revenues of 18.4 billion worldwide a d universal 5.4 billion. Worldwide attendance was 150 million to 50 million. So disney pretty much tripled them in attendance and revenue.
TJJohn12
Well-Known Member
I’m going to be a hopeless Pixie Duster right here, not having been to Universal since I was in middle school - does their daily gate compare to MK?
I.E. can we use them as a viable comparison?
BGibby
New Member
Well Disney should be higher is my thought process although I’m not sure how revenues could compare but I was thinking it could get a general ballpark but maybe I could be oversimplifying this a ton.
TJJohn12
Well-Known Member
I’m honestly wondering, frankly. It seems like a good leap, but I don’t know if the numbers check out (nor where to find them readily).