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Americanas’ accounting inconsistencies

February 08, 2023

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Credit: REUTERS/Sergio Moraes

Americanas’ accounting inconsistencies

Earlier this year, the CEO and CFO of Brazilian retailer Americanas (think Brazil's version of Target) resigned after the discovery of around $3.88 billion in accounting “inconsistencies”. CEO Sérgio Rial had been in the job for only two weeks.

The company’s share price plunged and then, two weeks after the discovery was announced, Americanas filed for bankruptcy protection.

Some have alleged fraud, but the FT reports ($) that the accounting issues could stem from a practice in which banks would pay Americanas suppliers in advance, with the company then responsible for the repayment of the loan plus interest. The interest transactions were not classified as financial debts, which may have resulted in higher reported profits. Some tough questions likely await the company’s auditor PwC, like, ‘hey, did you actually audit this company?’.

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Off-balance sheet items

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