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Financial Statement Fraud Schemes - Essay Example

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Financial Statement Fraud Schemes

This case involves several characters, namely; Mr. Karina Ramirez, the director internal auditor at Apollo Shoes Company, the engagement manager Mr. -Darlene Ward law, Mr. Arnold Anderson the engagement partner and the intern Bradley Crumpler (Timothy, Loretta, & Kenneth, 2011). The communication in this company entails the use of email messages because physical interaction is limited between the employees (Timothy, Loretta, & Kenneth, 2011). Based on this case it can be scrutinized that the company accountants has not been ensuring that all items are properly recorded for easy audit. Additionally, the company does not have enough experts to carry out audit work (Timothy, Loretta, & Kenneth, 2011). This can be scrutinized with a scenario where an intern was incapable of making necessary entries in the books of accounts as other members were busy doing other duties (Timothy, Loretta, & Kenneth, 2011). Poor financial management has subjected customers to financial difficulties and this has made the company fail to accomplish goals and objectives. This can be substantiated by in the director statement when he asserted that the company sales was not strong and therefore there was a need to relook on the marketing plan(Timothy, Loretta, & Kenneth, 2011). 1. Identify potential financial statement fraud schemes would likely be present in Apollo Shoes Company The financial statements fraud schemes has been presented in the Apollo’s Company case in numerous ways. There have been some underlying discrepancies between the figures in the financial statement and director’s reports (Timothy, Loretta, & Kenneth, 2011). For example the audited financial statement indicated that Inventories were valued at $18,825,205.24 while unaudited financial statements indicated that inventories were valued at $$67,424,527.50 (Timothy, Loretta, & Kenneth, 2011). This shows that there was a discrepancy of $48599322.26 obtained by finding the difference between the unaudited and audited financial figure which is a clear indication that fraud was taking place (Timothy, Loretta, & Kenneth, 2011). Additionally, inventories were valued at $18,825,205 in the year 2010 while reserves were valued at $3,000,000 (Timothy, Loretta, & Kenneth, 2011). This shows that there was an approximate of fifteen percent reserves in the company. On the contrary, inventories were valued at $67,424,527 in the year 2011 while company reserves were valued at $867,000 indicating that there were only 1.2% reserves (Timothy, Loretta, & Kenneth, 2011). The above discrepancy was so wide and therefore it is a clear sign that fraudulent acts were taking place in Apollo’s company (Timothy, Loretta, & Kenneth, 2011). In above connection, it can be scrutinized that the company did not established measures to safe guard shareholders interest. For instance; between 2009 and 2010, revenues were reported to increase from 10% to 15 % respectively and that customers were allotted a fair share according to the directors’ report (Timothy, Loretta, & Kenneth, 2011). However, this was not the case because the figures could not be reflected in the books of accounts. Additionally, it has been reported that customers were undergoing via financial difficulties (Timothy, Loretta, & Kenneth, 2011). 2. Describe the types of evidence you would look for to ...Show more

Summary

Financial Statement Fraud Schemes, Apollo Shoes Company Name: Lecturer: Course: Date Introduction Apollo Shoes Company deals with production of various types of shoes that include: common athletics shoes branded as SPOTLIGHT, the Police shoes branded as SIREN and athletes shoes with speakers branded as SPEAKERS shoes (Timothy, Loretta, & Kenneth, 2011)…
Author : rmcglynn
Financial Statement Fraud Schemes essay example
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