Is it time to put Hollywood's accounting tricks to bed?

Looks like Macy’s has more than just holiday deals to sort out this season. The retail giant just uncovered a $154 million accounting mess that’s been lurking in the books for years, delayed its earnings report and sent shockwaves through Wall Street. With sales falling short and internal controls under scrutiny, Macy’s is in serious cleanup mode — and we’re all watching to see how it unfolds.

In Today's Newsletter:

⚫ Hollywood's accounting tricks
⚫ Aprio acquires California firm
⚫ AI continues to reshape accounting
⚫ PE Firm acquires accounting practice

Macy’s earnings delayed amid $154M expense scandal

Macy's delayed its third-quarter earnings release on Monday after uncovering a staff member concealed up to $154 million in delivery expenses over the course of several years. The accounting scheme, which involved deliberate errors in accrual entries, spanned from the fourth quarter of 2021 through the third quarter of 2024. Following this discovery, Macy's disclosed preliminary results that showed sales falling below analysts' expectations. The retailer is currently investigating the issue, which has raised concerns about internal controls and financial transparency. (Reuters)

Above: Macy's Herald Square (Courtesy of valeriyap/stock.adobe.com)

Are Hollywood’s accounting tricks hiding profits and dodging taxes?

Hollywood studios have long relied on crafty accounting practices and tax loopholes to create the illusion that many of their films lose money. These strategies help them avoid taxes on production costs and bypass profit-sharing obligations with actors and directors. But how do these financial maneuvers work, and is it time to put an end to them? (Morning Brew)

What we found: This LinkedIn post that shares some solid tips on hiring and retaining great team members — hire for attitude, trust your people, and don’t tolerate poor performance. Definitely a good read if you’re looking to build a high-performing team.

What we're listening to: This episode of the Accounting Best Practices podcast, which delves into accounting for carbon credits.

What we're keeping on eye on: The Macy's accounting situation is the talk of the town and this Reddit thread has all the tea. 

What we're laughing about: This accounting meme that pokes fun at the stressors of accounting (and serves as a good reminder to moisturize!)

$16.9 million

Prize money won by tennis player Jannik Sinner in 2024 (Tennis Majors)

• Accounting firm Aprio acquires KKB's Woodland Hills practice
• Audit reveals financial mismanagement at Homeless Services Agency
• PCAOB issues new reporting rules
• AI revolution reshapes accounting: Industry leaders share insights
• School error leaves Robbinsdale district $20M in red

PE firm buys Evelyn Partners accounting division for $880M

British private equity firm Apax has reportedly purchased Evelyn Partners accounting division for $880 million. The acquisition followed a bidding war with rival firm Bridgepoint, which offered a lower amount for the professional services unit. This division includes the former Smith & Williamson business, acquired by Evelyn Partners in 2020. The Sunday Times reported that Apax ultimately outbid Bridgepoint to secure the deal. (MSN)

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The Net Gains is curated and written by Paul McCormack and edited by Bianca Prieto.