Blog Assignment

Before I provide my insight, I do think that Macy’s handled the situation fantastically after the fact. They couldn’t change the past and they accepted that, they decided to move on and focus on the future like and big company should do.

On the other hand, this should never have been possible at such an esteemed company. I believe that Macy’s needs to enhance their auditing process, specifically from an external source. This means that that an accountant not directly employed by Macy’s would look at their financial statements and inventories, rather than an accountant employed by Macy’s. This would improve consumer sentiment and trust in the brand as well as gaining trust back from the general public.

A number of sources and professionals agree that Macy’s internal control system should have caught this anomaly and there is no excuse for it not to have been caught considering Macy’s reputation. However, we do know that Macy’s did completely overhaul their financial processes and auditing system after this fraud and believe these measures will ensure something like this will never happen again.

https://finance.yahoo.com/news/macys-132-million-mystery-auditing-094021793.html

Everyone with a platform, a voice, and an opinion has commented on the dilemma that Macy’s faced. Whether through their own platform or by simply commenting on a post or news publication, many have something to say.

LogicManager, a risk management software company claims that the issue was systemic and resulted from complacency and larger issues within Macy’s Separation of Duty principles. They even go as far as to claim “The Macy’s accounting scandal was not just a lapse in judgment; it was a systemic failure. It revealed cracks in the company’s internal control framework, exposed weaknesses in its governance culture, and ultimately reminded the business world that risk management is not optional”. Of course, LogicManager is a slightly biased source as they want to push their product on anyone and everyone they can, however it is hard not to see the truth behind their claims.

Reddit may not be a very trustworthy source of information, however it is very beneficial when trying to understand what the general public may believe. One user quotes Blake and David’s accounting podcast on which these podcasters seemed to have discussed the fraud at length. This post started a massive conversation within the accounting subreddit. Many of these users believe that there is more to the story, claiming it is easy to throw a junior or low level employee “under the bus”. Most believe there is more than what meets the eye and than what is being reported by Macy’s.

Most trustworthy is the WallStreetJournal who published an article on the backlash Macy’s received for revising their financial statements, however not withdrawing their past statements. This can clearly lead to confusion and a number of professionals are claiming that Macy’s public statements could be subject to fine and are completely misleading.

https://www.wsj.com/articles/macys-accounting-scandal-raises-questions-about-which-errors-matter-fdebaa17?gaa_at=eafs&gaa_n=AWEtsqdxh2Aro1YdNXYLpbO79QE53K4fOFPqyHEq0fGCPmaFJsHr0iiKsOGcdnWltQo%3D&gaa_ts=691279e2&gaa_sig=QLDBWXEv8jfz6EtA-x98fzZ1-K5ffNavziJc47-SwIm4XqqDnVSfosv2wHFGMSXNO2BNwFpzIJV8Expik1SKmg%3D%3D

https://www.logicmanager.com/resources/corporate-governance/macys-154m-lesson-why-every-company-needs-separation-of-duties/

https://www.reddit.com/r/Accounting/comments/1h0iua8/macys_employee_did_a_je_wrong_resulting_in_154m/

Immediately following the detection of their numerous accounting errors, Macy’s fired the accused employee. Macy’s chairman and CEO Tony Spring addressed the situation claiming, “We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again and demonstrate our strong commitment to corporate governance”. It was clear that Spring wanted the public to move on from the dilemma and focus on the future.

The company was also forced to delay their Q3 earnings report due to the substantial bookkeeping errors. On top of this, Macy’s was forced to clawback their inflated bonuses rewarded to a number of executives at the company which is still ongoing.

Above you can see an example of how Macy’s was forced to revise all of their financial statements to account for the fraud.

I believe that Macy’s handled this situation the right way. As such a big company, it would be disturbing if they mishandled a situation of such great importance and impact on their public image.

https://www.freightwaves.com/news/macys-151m-freight-accounting-scandal-what-happened-with-parcel-deliveries#:~:text=However%2C%20the%20discovery%20of%20the,be%20vulnerable%20to%20employee%20manipulation.

Inside Macy’s $151 million accounting error

https://s202.q4cdn.com/285121676/files/doc_financials/2024/q3/M-2024-11-02-10Q.pdf?utm_source=chatgpt.com

https://www.streetinsider.com/SEC%2BFilings/Form%2B8-K%2BMacys%2C%2BInc.%2BFor%3A%2BDec%2B11/24090806.html?utm_source=chatgpt.com

Macy’s was founded on October 28, 1858 by Rowland Hussey Macy, in NYC. Eventually Macy’s grew and moved to Herald Square, becoming a landmark and eventually becoming a juggernaut amongst retail stores.

Eventually, Federated Department Stores Inc. acquired the Macy’s chain. In 2007, Macy’s became the face of Federated Department Stores Inc. and all of their subsidiaries, substantially growing Macy’s portfolio. Today, Macy’s is headquartered in New York City and is a global department store chain, owning a number of other brands including Bloomingdales.

Macy’s operations include store and digital retail channels, supply chain fulfillment, cost efficiency and real estate strategy, and corporate responsibility.

Mission Every One: Empowering More Voice, Choice, and Ownership.

https://www.macysinc.com/newsroom/news/news-details/2020/Macys-Inc.-Announces-Three-Year-Polaris-Strategy-to-Stabilize-Profitability-and-Position-the-Company-for-Growth-02-04-2020/default.aspx?utm_source=chatgpt.com

https://www.macysinc.com/purpose/mission-every-one/default.aspx

https://www.macysinc.com/company/about/

https://www.macys.com/s/brand-heritage/history/

In late 2024, Macy’s announced that a single employee had made a number of intentional accounting errors. These errors caused Macy’s to delay their quarterly earnings, making a statement that the anonymous employee intentionally hid up to $154 million in expenses over the course of three years. Macy’s reported that said employee created a number of false accounting entries to misclassify delivery costs. This resulted in an inflation of executive bonuses, however it was confirmed that said employee was not motivated by personal gain, but was trying to cover up a bookkeeping mistake.

https://www.cnn.com/2024/11/25/business/macys-accounting-expenses-earnings

https://www.logicmanager.com/resources/corporate-governance/macys-154m-lesson-why-every-company-needs-separation-of-duties/

https://nypost.com/2025/04/02/business/macys-clawing-back-execs-bonuses-linked-to-accounting-scandal/