The Function of Ethics and Financial Services - Essay Example

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The Function of Ethics and Financial Services

The company was involved in a fraud scheme whereby Gottlieb and Drabinsky received $7, 000, 000 directly or through the company owned by Gottlieb. $ 4, 000, 000 of the total amount was capitalized as the pre-production costs. Gottlieb and Drabinsky operated a kickback scheme with Livent vendors and took the mentioned amount from the company and took into their own pocket. To fully convince the company of the transaction, Gottlieb instructed the two vendors to present an invoice that could not expose their deal. Gottlieb and Drabinsky received the payment for bogus services. In the mid-1990s, it became difficult for the company to attain its financial goals. Gottlieb and Drabinsky enjoyed their financial gain, and in turn, the company had to bear the loss. It became difficult for the company to raise additional capital to sustain its operation. Gottlieb and Drabinsky manipulated the company by directing Livent’s accounting staff to obscure the company’s financial crisis. Some of the manipulations included erasing the accounting records that recorded the liabilities and expenses of the company at the end of each year. The Livent’s accounting staff engaged into an accounting scam of transferring the preproduction costs of existing show to shows that were in production. This transfer manipulated the company to comprehend the cost of the major items used in production. To reduce the costs of preproduction, Livent’s accounting team transferred the costs to fixed asset accounts. ...Show more


An essay "The Function of Ethics and Financial Services" analyzes that the company had excluded some of its expenses from its financial book. The case highlights various red flags such as an extreme growth-oriented management team and growing need for extra capital…
Author : hauckkarine
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