Disney’s Fairy Tale … Ending? Whistleblower accuses company of cooking books for years

Views are flying fast and furious about Disney, since the recent headline grabbing news that a Disney whistle-blower told the SEC the company had materially inflated revenue for years. whistleblower

The allegations are that management repeatedly inflated revenue in the parks and resorts segment by billions of dollars. Disney has denied the allegations completely.  The SEC has not commented yet, but that is unsurprising, as it never does in matters under investigation. The whistleblower, a former company accountant, claims that she had  brought her concerns to Disney  management twice, was ignored, and then fired. Regardless of the outcome of the SEC’s investigation, this has not been a positive for the Disney brand.

The SEC Whistleblower Program

The SEC whistleblower program offers awards to whistleblowers who provide original information that leads to successful SEC enforcement actions with total civil penalties exceeding $1 million. A whistle-blower award ranges between 10% – 30% of the monetary sanctions collected in actions brought by the SEC and related actions brought by other regulatory or law-enforcement authorities.

Encouraging whistleblowers can actually be good for your company.  It reinforces an organization’s compliance culture and helps to prevent the risk of SEC retaliation charges or the loss of a company’s reputation. Apart from adhering to compliance, it is in a company’s best interest to  encourage employees to raise a flag in the case of fraud or wrong doings. A transparent corporate culture that uses internal controls to detect fraud as well as encourages champions of truth to speak up is the most sought after environment to work in.

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Make Technology work for you

To ensure compliance, it is necessary to have robust processes in place to record, verify, track and report the health of the business. Strong internal-reporting systems and controls, as well as strong corporate governance, are the best defense against regulatory action; and the use of an advanced regulatory compliance platform such as IRIS CARBON® can facilitate a smooth compliance reporting process.  The need for implementing a robust compliance program is well understood: a properly functioning one may not bring any accolades to the CFOs office, but a badly executed one can surely attract penalties. Moreover, apart from reducing the severity of penalties, establishing an effective compliance and regulatory reporting program makes good business sense and can enable organizations to better protect the corporate brand by reducing the likelihood of unsavory events.

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