lownoise22
New Member
My fiancee is the General Manager of a division of a national company. Her employment agreement stipulates that part of her compensation is based upon her performance as measured by controllable profit results for the division.
Lately, when reviewing her division's P&L statements, she is finding a number of expense items posted to controllable profit accounts which clearly do not belong there. Typically, they are in fact corporate expenses which apparently are being divided and distributed amongst various divisions. Some are not even traceable to her division's operation, and in all cases, they are ones that she has no control or influence over whatsoever.
Inquiries of the Accounting department regarding these postings have so far gone unanswered.
It is easy to see how top management may have incentives to engage in these kinds of accounting practices. By removing said expenses from the Corporate accounts, their domain's operation appears more profitable - perhaps resulting in additional bonus compensation for them. And the consequence of reducing a division's controllable profit is a reduction in payroll expense, further burnishing the corporate bottom line, and so on.
Given that the term Controllable Profit does not mean whatever one wants it to mean, but refers to and includes those items that management has at least some influence or control over, and given that the manager's compensation is being based, in part, on the reckoning of performance as reflected in these accounts, we are very interested in the legal ramifications of such 'creative' accounting methods, and what recourse we may have.
Thank you.
Douglas
Lately, when reviewing her division's P&L statements, she is finding a number of expense items posted to controllable profit accounts which clearly do not belong there. Typically, they are in fact corporate expenses which apparently are being divided and distributed amongst various divisions. Some are not even traceable to her division's operation, and in all cases, they are ones that she has no control or influence over whatsoever.
Inquiries of the Accounting department regarding these postings have so far gone unanswered.
It is easy to see how top management may have incentives to engage in these kinds of accounting practices. By removing said expenses from the Corporate accounts, their domain's operation appears more profitable - perhaps resulting in additional bonus compensation for them. And the consequence of reducing a division's controllable profit is a reduction in payroll expense, further burnishing the corporate bottom line, and so on.
Given that the term Controllable Profit does not mean whatever one wants it to mean, but refers to and includes those items that management has at least some influence or control over, and given that the manager's compensation is being based, in part, on the reckoning of performance as reflected in these accounts, we are very interested in the legal ramifications of such 'creative' accounting methods, and what recourse we may have.
Thank you.
Douglas
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