Ex-Disney accountant alleges major accounting fraud in parks and resorts division

[Sir_Cliff]

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.

It also struck me as something that mid level managers might do to hide their failures. More specifically, it made me think of the manager at the Disney Store I worked at years ago who ended up getting fired as she figured out that returns weren't getting deducted from sales in the weekly revenue figures, so started "selling" a whole bunch of items and then quietly returning them. Suddenly those piles of Buzz Lightyears off to the side backstage made sense...

why are people so quick to trust corporations, specifically public ones whose survival depends on turning a profit for its shareholders?

i have no idea if these claims have merit, and frankly, neither do the vast majority of any of us here. it's just amusing to me that every news item that has broken in the past two days can somehow be *magically* explained away by "crazy" people with axes to grind.

EDIT [added this part]: also, want to know why a certain person constantly screaming "fake news" is problematic? because it gives license to anyone to just claim anything negative written about them is "fake," even when it comes from reputable reporters and news outlets that have and are beholden to journalistic ethics.

I don't think people are just taking Disney's word. What I've seen on this thread is people trying to figure out if the allegation makes sense and if there's any evidence that would suggest it was true in the available information. Rather than declaring it all lies, I think we're all just scratching our heads on both counts.

 

[Casper Gutman]

Here’s what we know: a whistleblower filed an allegation with the SEC and it is being reported on by reputable news sites. That’s it.

Given the events of this week, it seems like it might be a real, real good idea not to lend too much credence to online voices trying to minimize the situation or label the whistleblower as crazy. I mean, if the last few days have taught us anything...

 

[BGibby]

Here’s what we know: a whistleblower filed an allegation with the SEC and it is being reported on by reputable news sites. That’s it.

Given the events of this week, it seems like it might be a real, real good idea not to lend too much credence to online voices trying to minimize the situation or label the whistleblower as crazy. I mean, if the last few days have taught us anything...

What we also know, Disney somehow managed to over double their Parks Revenue without anyone noticing, some serious skill.

 

[smile]

not sure how one goes hard either way with the info provided

 

[Chef Mickey]

What we also know, Disney somehow managed to over double their Parks Revenue without anyone noticing, some serious skill.

How do you know that?

 

[BGibby]

How do you know that?

I was being sarcastic but the claim is they had 10.whatver billion in revenue but was overstated by 6 billion so they should have had around 4 billion so if they had said they had 10 billion and only had 4, they doubled their revenue with no one noticing and that is some skill.

 

[Slpy3270]

Here’s what we know: a whistleblower filed an allegation with the SEC and it is being reported on by reputable news sites. That’s it.

Given the events of this week, it seems like it might be a real, real good idea not to lend too much credence to online voices trying to minimize the situation or label the whistleblower as crazy. I mean, if the last few days have taught us anything...

That the employee repeatedly informed the executives about the fraud yet was ignored and later fired when she took matters into her own hands implies that a) the executives didn't care or b) were involved the scheme the whole time.

Given that fact, plus the past history of accounting scandals destroying or significantly damaging corporations that were once considered bastions, it's hard not to panic nor overstate the impact it could have on Disney and its image (plus effectively taint Iger's legacy).

And yes, the timing is coincidental. This story likely would've broke even the streaming service or Fox deal never happened.

 

[Jimmy Thick]

Not seeing DIS effected by these allegations. If this was as serious as people are trying to make it out the stock would be effected.

 

[Chef Mickey]

I was being sarcastic but the claim is they had 10.whatver billion in revenue but was overstated by 6 billion so they should have had around 4 billion so if they had said they had 10 billion and only had 4, they doubled their revenue with no one noticing and that is some skill.

I seriously doubt it was anything close to significant. I have a large position, so maybe I am biased. The market has totally shrugged this off, however, which is a sign the worry is waning. I believe Disney's excellent track record should give them the benefit of the doubt.

GE didn't get any such benefit of the doubt.

 

[Slpy3270]

Not seeing DIS effected by these allegations. If this was as serious as people are trying to make it out the stock would be effected.

It is. It's barely moving because investors are uncertain about what's going on. If the SEC announces that an investigation is being opened (which at this rate looks increasingly likely), then that's when the panic starts.

 

[Chef Mickey]

That the employee repeatedly informed the executives about the fraud yet was ignored and later fired when she took matters into her own hands implies that a) the executives didn't care or b) were involved the scheme the whole time.

Given that fact, plus the past history of accounting scandals destroying or significantly damaging corporations that were once considered bastions, it's hard not to panic nor overstate the impact it could have on Disney and its image (plus effectively taint Iger's legacy).

And yes, the timing is coincidental. This story likely would've broke even the streaming service or Fox deal never happened.

I've seen this happen internally. People get something in their head and push the idea. It doesn't mean they were right, but they can't let it go. If she became belligerent and disruptive to push this idea, Disney might have had enough and let her go.

It's difficult to fire someone at a large corporation because they don't want legal exposure. I'm pretty confident Disney did their due diligence to not only fire her, but address the "issues" she had to ensure there wasn't future exposure. I think Disney feels comfortable they'll come out clean or they would have never fired her.

 

[Chef Mickey]

It is. It's barely moving because investors are uncertain about what's going on. If the SEC announces that an investigation is being opened (which at this rate looks increasingly likely), then that's when the panic starts.

If investors are uncertain or scared, they sell...they don't wait to see what happens. The stock is not being impacted by this news at all.

 

[Slpy3270]

If investors are uncertain or scared, they sell...they don't wait to see what happens. The stock is not being impacted by this news at all.

That would make a stock sell-off post-potential SEC announcement worse, as the "wait-and-see" investors would be caught completely off-guard by the news.

 

[peter11435]

That would make a stock sell-off post-potential SEC announcement worse, as the "wait-and-see" investors would be caught completely off-guard by the news.

I think you missed his point

 

[TomDisney]

 

[bubbles1812]

It is. It's barely moving because investors are uncertain about what's going on. If the SEC announces that an investigation is being opened (which at this rate looks increasingly likely), then that's when the panic starts.

I feel like you are making a lot of assumptions. Lately, Wall Street has taken a much more ‘sell first, ask questions later’ approach. It’s very reactionary. The quarterly reports, for example, create some really volatile swings (not just talking DIS here)

If people were worried, they’d already be selling. What you’re claiming isn’t reflective of reality to me.

 

[Chef Mickey]

That would make a stock sell-off post-potential SEC announcement worse, as the "wait-and-see" investors would be caught completely off-guard by the news.

Of course, but stocks react quickly (like yesterday) if there is ANY worry of accounting irregularities. Sell first, ask questions later. In this case, no one is really worried. Not enough info and plenty of credibility for Disney.

 

[Jimmy Thick]

It is. It's barely moving because investors are uncertain about what's going on. If the SEC announces that an investigation is being opened (which at this rate looks increasingly likely), then that's when the panic starts.

If the company was in trouble which it clearly isn't investors would be dumping stocks right now. They are not. The stock is not "barely moving", its acting accordingly to its value at this time, any person with an inkling of knowledge of the stock market can see this.

I think people are trying to make something out of nothing.

As people ignorantly try to compare this to Enron lets rewind a bit. Enron was making all this revenue and would not explain how they were making money. Reporters called them out and they blew them off. Their stock was worth far more than they as a company could conceivably make which made them a target for the SEC. Not to mention they would not show their books.

Disney on the other hand have been nothing but transparent. You can't cook the books Enron style anymore, no one person is that clever and there are too many paper trails to find and the internet is a terrible mistress.

This is nothing more than a disgruntled employee who could not get along with people lashing out because she lost her job.

Nothing more nothing less. I'll leave it to the peanut gallery to try to make this into something it just simply is not.

 

[RobbinsDad]

why are people so quick to trust corporations, specifically public ones whose survival depends on turning a profit for its shareholders?

i have no idea if these claims have merit, and frankly, neither do the vast majority of any of us here. it's just amusing to me that every news item that has broken in the past two days can somehow be *magically* explained away by "crazy" people with axes to grind.

EDIT [added this part]: also, want to know why a certain person constantly screaming "fake news" is problematic? because it gives license to anyone to just claim anything negative written about them is "fake," even when it comes from reputable reporters and news outlets that have and are beholden to journalistic ethics.

I get your point - for me it's not illuminating that corporations flex rules and ethics for profits (they do). People who are quick to call this person a nutjob or disgruntled should stop without knowing more facts.

But when does rule-flexing become illegal acts? That's where additional scrutiny is necessary and skepticism around that issue is healthy. Innocent of actual crimes until proven guilty.

 

[BGibby]

I would just like to point out what makes more sense here...

On one hand we can say she is right, Disney overstated the revenue by 6 billion... what does that mean? Well Universal made 5 billion dollars in 2017 on 50 million attendees. Putting the “right” revenue into 2017 dollars means that Disney in 2009 made 4.57 billion on 120 million guests? Does that really seem right? Or does the stated 10 billion from Disney adjusted too 11.68 in 2017 dollars for 120 million guests make more sense?

Seeing as Disney makes about $15 dollars more per park attendee then Universal, I guess they both must be into some shady business...