Summarize the events of a recent accounting scandal. Identify how the illegal or unethical act was detected and describe the punishments that resulted (fines, prison terms, etc.). Consider what could have been done to detect this act earlier or to prevent it from happening in the first place. Select a different example than those listed in previous posts
Summary: The SEC alleges that four executives in China orchestrated the scheme at AgFeed Industries AgFeed Industries Inc. inflated its revenue by $239 million by creating fake invoices for the sale of feed and purported sales of hogs that didn't actually exist, among other methods, the SEC said when it filed suit against the company in March of 2014. The moves boosted the company's annual revenue over a 3 ½-year period by amounts ranging from 71% to 103%, according to the SEC. It is believed that the company engaged in fraud and maintained two sets of books.
Illegal and Unethical Act detected:
The SEC alleges that: End of 2011, at the instigation of a new COO at the company, that AgFeed announced it had formed a special board committee to “conduct an investigation into the accounting practices of its Chinese operations.” In 2010, Agfeed merged with an American company. Early 2011, the company replaced the Chinese businessmen involved in the illegal fraudulent activity. Two Americans that were set to gain enormous cash bonuses helped hide the fraudulent activity. Emails from 2008 showed that the Finance Manager in China had reached out to her bosses over concern that auditors would discover the falsified revenue reports.
“AgFeed’s auditor: Goldman Parks Kurland Mohidin LLP, a California firm with no China operations, was the company’s independent auditor from 2006 through 2010. Goldman Parks farmed out the auditing work in China to a Chinese firm, according to public