Furthermore the case stated that there was actually no audit work that was done, and Madoff’s cousin was the sole practitioner conducting the audit. These factors raises serious questions of obvious bias and unethical practices involved in performing the audit. Another solution is to provide a safe environment or an outlet for individuals to disclose their potential concerns of fraud. For instance, an outlet such as fraud hot line may have encouraged those who turned the other cheek to come forth. Between the two alternative solutions, I believe that the first solution of tightening the review process of the SEC would be most effective in combating the problem statement.
Managers took gamesmanship to improve their performance indicator without producing any positive economic effects. These problems had surfaced earlier, but the company top management fails to attach enough importance due to the following reasons. The setting of sales targets is not reasonable for all divisions at one rate.
• Ethical Violations: Some sales reported were greater than total cash register receipts ➢ Employees were pushed to be results and sales oriented. • No camaraderie between the sales personnel: Not willing to help each other out during down times, slow periods. Clerks would attempt to steal sales from other departments. • Employees felt pressured to make sales. • Poor communication after Mr. Barton discontinued the tally system.
In addition, much of the new assignments are given to untrained professionals with strict completion deadlines. Because of such dilemmas the auditing firm has been faced with the ethical dilemma of whether to assist with the accounting issues at MHA and NYH. As a professional in accounting I have agreed to terms of independence. By confirming to such terms, I must not issue any non-audit services. As the auditor of both MHA and NYH, according to Sarbanes-Oxley Section 201, I am prohibited most non-audit services to public audit clients.
Last July 2012, a new financial fraud came out and hit the news headline, déjà vu, perhaps of other famous scandals, but not. This time a medium size financial institutions, name “ Peregrine Financial Group Inc” accused of shortfall of funds for around $200 million, where its CEO, Russell Wasendorf managed to misstated financial record for over 20 years, and finally in July 2012 filed for Bankruptcy. This particular case raises the questions of the role of controlling agencies , these last two hold a percentage of responsibility in this case. How PFG could managed to forge bank documents and financial record for such a long time, the clear response is the lack of controls and oversight. This has become a major problem over the last financial scandals as well.
There was not a written agreement between United Thermostatic Control and the customers, so therefore, the shipments should not have been sent. Campbell had been reassured by Lorenzo, Executive Vice President of sales and marketing, that there is nothing wrong with recording the revenues in 2010, however, this was still a concern for the CPA, Tony Cupertino. The legality of the events was within the laws of federal, state and local government. Reporting the revenue properly after sending out the shipments would not have violated the FOB shipping point. Although the shipments were sent before they were scheduled to, Cupertino was uncertain whether to pursue this issue any further.
Yet he was not complacent. In Dow Corning’s recent history complacency had once before undermined corporate performance. He could not let this happen to Xiameter. Fillmore saw his job as protecting the business from growing competitive threats and answering the “What next?” question for its future. As an optimist he saw promising future directions.
The conventional analysis of this classic case study brings forth a long laundry list of management errors, mistakes and miscalculations. Yet, this seems improbable for such an experienced and competent organization. How could they make so many mistakes in so many different areas? Wickham Skinner first used this example in his 1978 book, "Manufacturing in the Corporate Strategy". He traced B&W's troubles to a single root cause: management had failed to identify the "Key Manufacturing Task".
Most corporations state that they did not realize that they had a high risk of fraud, which causes one to ask whether fraud could be prevented (Samociuk & Iyer, 2010). This is often because most companies base their operations on trust among their employees, which often leaves a company vulnerable to the idea that their employees will work honestly. This is
Impala Platinum and Lonmin saw it’s stocks fall by 11% and 21% respectively. In contrast, Anglo American Platinum’s stock increased by 9% throughout the duration of the strike. During the strike platinum prices increased by 6% on a global level. Prices decreased in June when negotiations for a higher wage were close to completion. The strike, which lasted a total of five months, affected 40% of the world’s production of platinum with the three main producers losing a combined total of R24 billion in revenue by the end of the strike.