United States Surgical Corporation
Prepared by
Alex Gonzalez & Daniella Trinchet
for
Professor C.E. Reese
in partial fulfillment of the requirements for
ACC 540 – Fraud Examination
School of Business / Graduate Studies
St. Thomas University
Miami Gardens, Fla.
Term A7 / Fall, 2014
October 24th, 2014
Table of Contents Issues 1 Facts 2 Analysis 5 Conclusions/Recommendation 12 References/Bibliography 14
Issues
1. What audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detected the overstatement of the leased and loaned assets account that resulted from the improper accounting for asset retirements?
2a. For USSC to extend the
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6. When a CPA firm has two audit clients that transact business with each other should the two audit teams be allowed to share information regarding their clients? Facts United States Surgical Corporation (USSC) was founded by Leon Hirsch in 1964 with very little capital, four employees and one product. The one product was an unwieldy mechanical device that he intended to market as a surgical stapler. Hirsch had already tried several lines of business and each had little success. Hirsch made USSC into a large and profitable public company traded in the national exchange. His surgical stapler revolutionized surgery techniques in the United States and abroad. Hirsch was the dominate company in the small surgical stapling industry but in the 1980’s was losing market share from competing companies domestic and foreign. Hirsch’s main competitor at the time was a company owned by Alan Blackman. Blackman’s company sold its products primarily in foreign countries but was attempting to significantly expand in the U.S. Blackman and Hirsch were former friends and Hirsch states that Blackman has infringed on USSC’s patents by reverse engineering the company’s products. In 1980’s, USSC began an aggressive counterattack to repel Blackman’s instruction into its markets. USSC adopted a worldwide litigation strategy to
This is a case about Eric Peterson, who was recently hired as a product manager in charge of sales and marketing of Biometra’s catheter. This product from Biometra, a subsidiary of Scientific Materials (SciMat), was the first product ever launched by Biometra and so its success was critical for both Biometra and SciMat. From the case we see that even though Eric Peterson tries hard to meet the product target launch date, there are several issues that he and the organization are experiencing.
Ambulatory Surgery Centers (ASC) was the vision of two physicians in Phoenix Arizona in 1970 who wanted to provide the same high quality surgical services as acute care hospitals while achieving greater accessibility to the patient as well as more control to the physicians. Dr. Reed and Dr. Ford saw the potential for many surgical procedures that did not require an overnight stay that would achieve higher productivity and cost savings to the patient.
Fraudulent activities and embezzlement are more prevalent in organizations than most people think. Because of the multitude of previous scandals, the Sarbanes-Oxley Act has required all publicly traded U.S. companies to have internal auditing and internal controls to check for fraudulent activity and embezzlement. While the Sarbanes-Oxley Act only applies to public businesses, the requirements of it should be applied to all types of businesses, even universities. In the Case of the City University of New York, having internal controls and auditing would have halted the embezzlement occurring there.
Question 10. 10. (TCO 11) The privilege of confidentiality applies to a CPA tax preparer concerning the client’s information relative to (Points : 2)
The concept of The Mobile Army Surgical Hospital, or MASH, was created by Dr. Michael Debakey before the Korean war, near the end of World War II, however, the first MASH wasn’t deployed until hostilities in Korea began. His idea for a MASH unit was to treat a wounded soldier as soon as possible, which meant that it had to be positioned near the frontlines, making it extremely dangerous for both the doctors and their patients (B).
1) Identify audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detected the overstatement of the leased and loaned assets account that resulted from the improper accounting for asset retirements.
In 1986, as a result of a joint venture between Medicare Glaser, Inc. and Sanus Corp. Health Systems, Express Scripts Holding Company was born in St. Louis Missouri. Four years later the company was bought by New York Life Insurance Company and by 1992 Express Scripts became publicly traded. A few of the company’s first companies that they signed on with were FHP International Corp. and Maxicare Health Care. They also signed on with corporate clients from Ingersoll-Rand Co., Lockheed Corp., and Service Merchandise Co. Express Scripts was able to bring their business to Canada when they announced a two-for-one stock split in
The Evansville Surgery Center is seeking a full-time CNA. The Evansville Surgery Center opened its doors in 1984. According to their website, they are the most respected outpatient surgery center in the tri-state area. Since 1984, the Evansville Surgery Center has expanded onto the Deaconess Hospital Campus, as well as the Gateway on the Deaconess Women’s Hospital campus. Some of the services offered at this facility are Mastectomy’s (surgical procedure in which part, or all, of the breast is removed), Breast Biopsy / Lumpectomy (Lumpectomy is the surgical removal of a cancerous lump (or tumor) in the breast), and Hernia Repair (all types).
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3. A) If I were put in this situation as an equity investor, I would absolutely pursue legal actions against the auditors. If there was a
In our opinion, with proper use of analytical procedures Ernst & Whinney should have detected the overstatement of the leased assets. The following analytical procedures should have been used, at least at the planning and overall review stages of the audit.
2. A public accounting firm doesn’t have a responsibility to its partners and employees when subpoenaed to testify regarding a client because according to PCAOB Section 5. Investigations and Adjudications Rule 5105, part A Testimony states the Board, and the staff of the Board designated in an order of formal investigation, may issue an accounting board request for the testimony of any person, including any client of a registered public accounting firm,
Pacific Medical Supply Company was a prominent supplier in the southern California region. They used to supply medical instruments and all other itineraries using a distribution channel consisting of sales commission based Sales force. Jim Shine, the owner of Pacific Medical, started off his career with a background of a salesman at a beach application store. His first venture into the medical supplies business commenced in a garage and slowly climbed up to be a fully fledged business covering Southern California meaning