Well he got caught. So obviously he didn’t successfully hide it. WorldCom and Enron got caught by going huge. I mean their fraud was multiple of their companies’ worth.
Materiality still matters. Nothing Congress passed changed that. It’s still part of GAAP, and still recognized by the SEC.
Oh here check this out, poking around materiality:
https://en.wikipedia.org/wiki/Materiality_(auditing)
Methods from Discussion Paper 6: Audit Risk and Materiality, as issued in July 1984
These methods offer a suggested range for the calculation of materiality. Based on the audit risk, the auditor will select a value inside this range.[15][failed verification]
0.5% to 1% of gross revenue;
1% to 2% of total assets;
1% to 2% of gross profit;
2% to 5% of shareholders’ equity;
5% to 10% of net profit.
So with the league pulling in $18 billion in revenues, we’re talking more that half a billion for the Jags. $5 million a year comes in under 1% of gross revenue, probably also under 2% of assets, might be over 2% of gross profits, no shareholders, but probably under 10% of net profit. So not really material according to paper 6.
And that’s how you get away with it. Keep it in the rounding error. There was probably some honest mistake somebody made that put the numbers far enough out of whack to make the auditors dig deeper, and boom.
You are correct
Wonder what tipped them to dig deeper
Wonder what tipped them to dig deeper
Yep. Like the “high penny roll” the car dealers do. Roll every number up without going over the next dollar amount and nobody ever notices, but it adds up to a nice bass boat or trip to someplace warm for the finance guy.