A Disney whistleblower is accusing the company of overstating its revenue by billions
- A former senior accountant at Disney has accused the entertainment titan of overstating its revenues by billions of dollars.
- Sandra Kuba alleged Disney employees recorded non-existent sales from giveaways and artificially inflated revenue from gift cards.
- She claimed the company's revenue could have been overstated by as much as $6 billion, or 20%, in 2009 alone.
- Disney has dismissed Kuba's claims as "utterly without merit."
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A former senior accountant at Disney has accused the entertainment titan of overstating its revenues by billions of dollars.
Sandra Kuba, who worked in Disney's revenue-operations department for 18 years, made the claims in whistleblower filings with the Securities and Exchange Commission.The allegations were reported by Marketwatch, which reviewed the filings and supporting documents. Disney has dismissed the claims as "utterly without merit."
In the filings, Kuba alleged employees in Disney's parks and resorts division recorded non-existent revenue from free golf rounds and guest promotions. She claimed workers recognised the $500 face value of gift cards as revenue even when guests purchased them at a 20% discount.
They also double-counted revenue from gift cards by recording sales when guests bought them and when they used them, and recognized revenue from gift cards that were given to guests for free, she alleged.
Disney's revenue could have been overstated by as much as $6 billion - about 20% - in 2009 alone, Kuba told Marketwatch. The parks and resorts division accounted for nearly 30% of total revenue that year, according to the group's annual report. Flaws in the firm's accounting software helped to hide the revenue manipulation, Kuba added.
Kuba reported the issues to management in 2013, brought them to the attention of a senior executive in 2016, and flagged them to the SEC in August 2017, she told Marketwatch. She was fired a month later, and filed a whistleblower-retaliation complaint with the Department of Labor in October 2017.
Disney told government investigators it fired Kuba because "she displayed a pattern of workplace complaints against coworkers without a reasonable basis for doing so, in a manner that was inappropriate, disruptive and in bad faith," according to Marketwatch.Kuba has made two other whistleblower filings since leaving Disney. In June, she alleged some Disney employees tried to slash the firm's sales tax liabilities by reclassifying revenue from high-taxed items such as hotel rooms as revenue from lower-taxed items such as food and beverages, Marketwatch reported.
"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," a Disney spokesperson told Marketwatch. "We're not going to dignify her unsubstantiated assertions with further comment."
Markets Insider has reached out to Kuba and Disney for further comment. We will update the story if we hear back.