Business & Management Studies

Abstract

This case describes a real-world fraud involving the retail department store Macy’s, a publicly traded company on the NYSE. In late 2024, Macy’s announced that they had discovered an accounting “error” in their financial statements. The discovery of the error forced Macy’s to delay their third quarter earnings release. Macy’s disclosed that a single employee had been falsifying accounting records for approximately three years, leading to financial statement restatements to correct delivery expenses, accruals and related tax effects. The error and restatements led to questions about internal controls at Macy’s. It also leads to questions as to whether this was correctly called an error, or if Macy’s should have described it as a fraud. This case examines the misstatement and its consequences, and can be used in an accounting or auditing classroom to help students understand errors and fraud, internal controls, ethical leadership, and regulatory requirements for publicly traded companies. Students will learn the importance of accuracy, transparency and ethics in record keeping and financial reporting. As we prepare students for the working world, these lessons in ethics will be more important than ever. This case is appropriate for an upper level undergraduate course or a masters level accounting or auditing course.