Xacc/280 Week 6 Project

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Week 6 Project In August 2001, Cynthia Cooper began an operational internal audit. This was her job and she simply was trying to do it. Cooper began to inquire on capital expenditures, Sullivan instructed Myers to restrict the scope of her audit. When she received a revised chart of expenditures, with a beginning accrual of 2.3 billion to 174 million it began to raise red flags. There were complaints of transfers of accruals in a portion of the business and bad debt expenses that had been done to up the financials. When she was told to investigate and the accountants told her they only answer to Sullivan, red flags went up everywhere. This behavior continued and resulted in a surprise SEC investigation, along with the board being informed of the information that the audit team received. Even with the outside auditors, continuing to give the company good rankings in regards to fraud risk, cooper continued with her audit…show more content…
with the audit committee and disclosed what they had found. At this point the company had no choice but to announce that the profits had been inflated tremendously, approximately $3.8 billion over the last five quarters. There trading was stopped and the corporate credit rating was severly downgraded. The SEC initialed its suit in the month of June and launched criminal investigations into the actions of all that were involved. In regards to reporting, I think that it was not timely. I do think that Cynthia Cooper did the best that she could, but in this situation she ran up against so many road blocks that she was unable to work more timely. I think that the methods used were good, but this company did not have controls in practice, so that made it extremely hard for Ms. Cooper. But on the other hand, once she had her proof in hand that the corruption and fraud was ongoing and very extreme she began to get people to listen to her. Unfortunately she never got the recognition that she

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