1. What internal control weakness at Netflix allowed its former VP of IT operations to allegedly receive kickbacks from technology firms?
Original blog posting (February 17, 2015)

2. Netflix files lawsuit against former vice president of IT operations, Mike Kail
Kail was in charge of entering into and authorizing contracts for Netflix’s tech vendors
Kail’s company Unix Mercenary received 12 – 15% commissions on all contract invoices paid by Netflix to two vendors, Vistara IT and Netenrich
Over three years, Netflix paid approximately $3.7 million to Vistara IT and Netenrich, which would translate into commission payments of between $440,000 - $550,000 to Unix Mercenary
The lawsuit only mentions specific payments of $76,000 to Unix Mercenary

3. Question 1
What internal control principle(s) does it appear was (were) violated at Netflix?

4. Question 2
How might Netflix have designed its internal processes differently to avoid the situation that arose with Mr. Kail?

5. Question 3
Should Mr. Kail be held totally liable for this situation? Does Netflix have any degree of responsibility in this situation?

6. Question Recap
What internal control principle(s) does it appear was (were) violated at Netflix?
How might Netflix have designed its internal processes differently to avoid the situation that arose with Mr. Kail?
Should Mr. Kail be held totally liable for this situation? Does Netflix have any degree of responsibility in this situation?

7. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Related video resources can be found at Questions or comments? Contact Dr. Wendy Tietz at