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Motive might have been to make their unit profitable and thus get bigger bonus
The whole story is crazy, but my assumption has been that it's some kind of cascading incompetence. People always like to assume it's some masterful crime, but more harm is done by people bumbling around than by perfidy. Having said that, I wonder if there was some small deliberate act and it somehow ballooned into the massive fiasco.
But didn’t they say the person didn’t take the money?
Really curious to know the motive as well. The individual who did this is going to have a rough time landing their next role I would think...
Landing in jail won’t be a tough time…. 😂
It looks like someone before this employee made the error and this guy just carried away as it is moving forward. Anyways mistakes is a part of human being it should not be public unless something is sketchy in backend. Identify and resolve the mistakes.
Given you won’t list a consultant for which firm, that likely makes you unemployed. Please do tell. Let go from which firm for incompetence?
These things never happen without collusion
Thank you! Like how many controls had to fail to get here
I read it as the employee didn’t take the money based on the statement that all bills were paid and cash flow was not impacted.
The only logical explanation is that certain items were capitalized instead of expensed. Perhaps stuff like gift boxes and hangers were treated as inventory. Could’ve been warehouse costs that were capitalized to inventory.
Ultimately, the amount was not material. They held earnings release until they got comfortable they had all the facts.
What's difficult to understand? 'Same as last year' or some similar workpaper reference/note and maybe suddenly this year there was a new Sr Mgr or maybe partner rotation and someone asked 'what's in this account' and this error became exposed.
Dont tell me you dont fear this type of error on every single one of your clients.
I'm assuming it's basic human greed
Where were the auditors?
PwC the 154 is after multiple years
Of course KPMG is the auditor😂😂😂
I think it could have been as simple as an employee being “told” to enter those kinds of shipping bills to Acc’t #6123 and then keying in 1623 without having the proper monthly reviews of books by senior accountants. Easier to let the little guy take the fall.
This cannot be a mistake. Specially knowing that internal control exists.
It’s not an error!
Hid it on the balance sheet..I worked for a company that had debit balances for reserves.. I left quickly..
Depending on the nature of the transaction, GAAP does allow for reserves but guessing the situation you encountered was not a standard circumstance
It probably wasn’t material
CR2: They delayed the filing of the financial statements because of it.
As a Professional Associate
Some ethical Standards must be duely followed, l
will not agree that the exact amount is missing,
I will conduct my checks and balances.
The cashbook and bank reconciliation.
The invoices and the records
The internal Auditor will be involved.
If such amounts is missing,
Ethically, for such amounts to miss,
It can cannot be one man action, all who involved will be queried by panel or investigative committee
I will asked the Auditor to conduct a backduty exercise to know how long such as being happing. etc.
Why ? Why would the employee do this?
Saw an update on this.
“The employee intentionally made erroneous accrual entries to hide approximately $151 million in cumulative delivery expenses.” (The expenses were incurred over a 3-year period. )
“Macy’s confirmed that it did not affect reported cash flows, inventories, or vendor payments.” So why the hullabaloo? I’m guessing they recorded outbound “small package delivery” expenses in COGS, when those should have been a selling expense. Or maybe the opposite. Or maybe they netted them against shipping charges to customers. There’s no strict accounting rules for this. Depends on how the company decided to apply ASC 606, but if the employee changed the recording, ASC 250 required a disclosure.
That makes sense and why they used “accrual entries” in the statement.