Report on Financial Statement Fraud Scheme

Report on Financial Statement Fraud Scheme Essay example
College
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 0
REPORT ON FINANCIAL STATEMENT FRAUD SCHEME CASE STUDY: THAT WAY LIES MADNESS  MEMO Date: March 02, 2013 To: The Management of Crazy Eddie Inc. From: Serious Fraud Investigating Officer Subject: Financial statement fraud investigations and findings report Summary of Investigation The financial statements of Crazy Eddie revealed that the company is making money by practicing fraudulent activities…

Introduction

The inventories were shared between the various stores of the company to boost sales. Various external vendors were arranged to ship merchandises of the company claiming fake discounts. Loads of merchandises were sold to wholesalers and then the receipts were spread to individual stores of the company. These illegal money was entered and circulated between the Antar family and was parked into undisclosed foreign bank accounts. The initial reports suggest that when Crazy Eddie went public about twenty years ago, its shares were traded at $8. The company’s shares have inflated 10 times during the years due to manipulation of accounts. By showing fake sales, misrepresented inventories, doctoring and window dressing financial statements, the company was able to hide its true picture of financial position from the public. Thus, the company’s stocks looked more attractive from outside than it actually was. The sales of the company never fell since the merchandises circulated between the various stores and was treated as revenues. Such fraudulent practices helped Crazy Eddie to maintain a healthy double-digit growth and consequently inflated the company’s share prices. ...
Download paper
Not exactly what you need?

Related papers

Financial Statement Analysis Report
The preparation of financial statement analysis requires financial ratios, accounting data from financial statements. The ratio assists in measuring strengths and weaknesses of the firm and allows trends and comparisons with other firms within the industry to be identified. It also covers the areas of liquidity, operating profits, financing and stockholders' return on investments (Collier, Grai,…
Security Fraud and Manipulations Using Accounting Policies and Rules
More importantly, a wide variety of security fraud and malpractice of accounting policies are employed in the preparation of the financial report accounting of Enron, Madoff scheme, and WorldCom Corporation that lead into their bankruptcy. Nonetheless, the Securities Exchange Commission (SEC) seeks to deter fraud in financial statements of companies through laws, internal control systems and…
Financial Statement / Audit Report Review
It will also discuss basic financial statements, management decisions and analysis for state and local government to each of the funds. Thirdly, it will evaluate management’s discussion and analysis (MD&A) and its significances. It will also determine whether the entity’s financial position improved or deteriorated during the reporting period. Finally, it will speculate on the causes of the…
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…
Financial Statement Fraud
Since the perpetrators of financial statement fraud may be outsiders who collaborate with certain account department employees, it is imperative for concerned organizations to carry out surprise financial audits regularly to detect and prevent any potential incidences of financial statement fraud. This paper focuses on revenue recognition fraud by examining the background, real-time incidence,…
Financial statement/audit report review
This is because it allows for real time recording of transactions and that means that it will be easy to keep a check of the financial data of the county (Stephen, 2012). The county uses the same cash basis accounting method for the proprietary and fiduciary funds. The proprietary funds consist of the enterprise and internal service funds. The enterprise funds account for external customers and…
Financial Statement fraud and Revenue recognition fraud
We can define financial fraud as an intentional act to deceive people through manipulated financial statements for personal gain (“Bank Negara Malaysia” 1). Financial fraud is crime under civil law and involves complex financial transactions conducted by white-collar business professionals with a criminal intention (“Bank Negara Malaysia” 1). Nevertheless, financial fraud derives numerous…