Macy’s announced that a rogue employee was responsible for hiding $151 million in delivery expenses over nearly three years by creating false cost entries. The employee, who acted alone and did not act for personal gain, initially made a mistake in accounting for small parcel delivery expenses and then intentionally falsified records to hide it. After an investigation, Macy’s found that its internal accounting controls were vulnerable to such actions, prompting the company to make changes to prevent similar incidents in the future. The employee involved is no longer with the company. Macy’s also announced that a report on its internal controls by independent accounting firm KPMG should not be relied upon. The discovery of the hidden expenses led Macy’s to delay reporting its quarterly results and caused its shares to drop significantly. Although $151 million is small in comparison to Macy’s overall delivery expenses during the period, it exceeds the company’s most recent fiscal year net profit. This revelation comes as Macy’s is facing challenges amidst changing consumer habits and had previously announced plans to close 150 stores. An outside investor group has also recently taken a significant stake in Macy’s with intentions to change the retailer’s operations, including monetizing its real estate holdings.
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