21819 Securities and Action No. CV 11-0092-PHX-DGC, where charges were formally brought forth against the senior management of the corporation. Prior to the indictment, the SEC formally charged NutraCea, two accounting personnel, and three executives for the unlawful engaging of fraudulent accounting in order to inflate the entities sales revenue. The corporations overstatement of sales revenue for both the 2nd and 3rd quarters of the 2007 fiscal year was done as a result of the corporation engaging in unethical activities of revenue recognition and by recording falsified sales. Those that were employed by NutraCea and were found guilty of engaging in improper activities and were charged by the SEC were former CEO Bradley David Edson, Secretary Todd C. Crow, Senior VP Margie Adelman, Director of Financial Services Scott Wilkinson and Controller Joanne D. Kline.
1) What were the individual factors that contributed to the failure of Enron? Briefly explain two key factors. In the repercussion of Enron’s bankruptcy filing, numerous Enron executives were charged with criminal acts. Those charges were fraud, insider trading and money laundering. Enron was described as “House Of Cards” as it was built over a pool of gasoline.
Nick had started out his career as a strike-force Agent; their basic function was to uncover possible criminal activities. Their duties often consisted of undercover work. The book explains some terms used in the industry along with some statistics, and IRS history. For example, in 1998 Congress prohibited financial status or economic reality techniques to determine the existence of unreported income unless an agent has a reasonable indication that there is a likelihood of unreported income. The targets of Special Agents who work for TIGTA are dishonest Treasury Department employees, as well as government officials and employees.
Read the case study and map the fraud case to the appropriate expense report fraud flow in Chapter 7 (Exhibit 7.4 or 7.5 or 7.6). In a 2-3 page paper address the following questions: which fraud flow and specific steps did the fraudster manipulate and how will the new processes installed deter, detect or prevent this from recurring? Travel and expense reimbursement schemes may seem like they are an easy fraud to perpetrate, however, the recurring problem is that people wind up getting too greedy and get caught because of it. Lucky for us the fraudster’s greed leads them to get sloppy when they believe that a fraud is going to continue to go undetected. This was the case in the article “Fashioning a Fraud” by Bethmara Kessler.
Accounting Fraud Examination October 12, 2011 Introduction As we look back on the first decade of the 21st Century, we see that Corporate America and the Financial Markets were riddled with corruption and fraud. At the beginning of the decade we saw the likes of Enron and WorldCom become insolvent due to accounting frauds of epic proportions. The one case that stands out amongst all of them is the Bernard Madoff case, which is considered to be the largest fraud case of all time. “Madoff managed to lure billions of dollars away from huge charities, as well as wealthy individuals in both the United States and Europe by getting them to invest in his hedge fund. He did so by claiming extraordinary returns (generally in the low double digits).
These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook the publics’ faith in the security markets. When examining the SOX act you can see that since 2002 many things have changed in the past eight years. Corporate governance is one of many things that have changed; Public companies must now have a totally separate audit committee composed of entirely independent directors and must contain one financial expert. Security fraud now has much more extreme punishments for those who commit or conspire to commit fraud. Since the introduction of SOX auditors of public companies must keep documentation of an audit for seven years, destruction of any documentation or evidence that someone has committed fraud is now punishable by jail time and fine.
Audit work paper manipulation by Deloitte Touche Ross in the North Face Inc.case. Course Title: Advanced Auditing Date: November 15th 2012 Author Note Abstract This paper explores the instance of audit work paper manipulation by Richard Fiedelman of Deloitte Touche Ross (DTR), a leading Public Accounting firm who failed to exercise due professional care in the carrying out of his duties in the course of the audit of their client North Face Inc. It evaluates the severity of the Securities and Exchange (SEC’s) sanctions imposed on Richard Fiedelman for the violation of Generally Accepted Accounting Practices (GAAP) and Generally Accepted Auditing Standards (GAAS). It also covers the practice of ‘materiality’ used by public accounting firms and how this should be addressed with audit clients. The paper discusses the options of responses to being asked to modify client work papers by the engagement partner.
The Collapse of Enron Barbara Bonnema Post University The Collapse of Enron What led to the eventual collapse of Enron under Lay and Skilling? How did the top leadership at Enron undermine the foundation values of the Enron Code of Ethics? How did Enron’s corporate culture promote unethical decisions and actions? These questions are answered and explained with examples as follows: 1)There are several reasons that eventually led to Enron’s collapse: a) A corrupt leadership at the top. Numerous Enron executives were charged with criminal acts, including fraud, money laundering and insider trading.
The Case of Bernard Madoff Case 5 Problem Statement: Fraud Summary : This case closely encompasses how Bernie Madoff was accused of creating a scheme that destroyed $65 billion in investments. He single handedly deceived thousands of people including auditors, accountants, and regulators. His scheme deceived so many intelligent people and regulators considered him legitimate. His family, auditors and employees have been under investigation to find out who helped and benefited from Madoff's scheme. Madoff claimed he was the only one at fault however his right hand man explained that numerous businesses new about his scheme and still accepted it and openly violated the law.
Of these, I believe two in particular depict the role of accounting in the financial crisis, these being the effects of fair values and the overly complex (and thus allegedly detrimental) nature of financial reporting. Let us first consider the issue foremost in the criticism against the accounting profession: that of fair values. According to Laux and Leuz (2010), the main allegations against fair value accounting in relation to the financial crisis were that they reported overstated leverage prior to the crisis and overstated losses during it, leading to excessive write-downs. These write-downs depleted the capital of banks and investment institutions, which consequently resulted in them making fire sales (selling their assets at very low prices) in order to meet their capital adequacy requirements. This then offset a downward spiral as a result of the contagion effects of the