1.8 Crazy Eddie, Inc. Essay

Brooks also engaged in accounting fraud schemes designed to increase the net income and profits that DHB reported in its press releases and filings with the Securities and Exchange Commission (SEC) by falsely inflating the value of DHB’s existing inventory, adding non-existent inventory to the company’s books and records, and fraudulently reclassifying expenses.

* Tests done are questioning management about procedures for determining uncollectible amounts and reviewing amounts

The one pattern within the data that appears to be inconsistent yet if the auditors had established an internal control systems would be Monus the founder moving so freely throughout every aspect of the company with no one checking his movements. From choosing what properties to purchase to purchasing supplies. In any company there should be segregation of duties. For example, the person making the deposits should not be the person writing the checks. Had there been stipulations made it would not have been so convenient to commit the

Mr. Spindler revealed that Eddie Antar engaged a series of schemes between 1984 and 1987 designed to embezzle money from the company and later falsely to portray Crazy Eddie as a thriving commercial enterprise so that Antar and others could sell their shares at an inflated price.

{. How many consecutives years the company has been profitable, its current ration and its ROE

In the case of Phar-Mor fraud, the company was involved in cover up and some accounts were created to hide the fraudulent activities. Bad inventory counts in the stores were made to help with the cover up and deceit about activities that cost hundreds of millions of dollars. (Williams, S.L., 2011)

This subject company in this case study is WoolEx Mills. The top management team at the Mills had to act fast to prevent the accusations charged upon them, so that they may venture deep into the United States market. In the process, they had to act in a way that will present the company’s financial statements; cash flows in a way that they did not show any suspicious fraudulent activities. The type of fraud in this case study is known as manipulation of accounts which involves the act of offering the accounts in the way they are not in reality.

The person performing the audit should have come across consignment documentation and as a result should have requested to see that inventory.

The accounting profession believes there are three conditions necessary for fraudulent behavior, as well as a responsibility to to perform quality services with integrity, objectivity, and professionalism. Accounting firms have the responsibility to hire and monitor competent personnel, so they can fulfill their assigned responsibilities. This report will explain how all three conditions were present in Anna’s actions, how Max and Company

The closing for inventory was leading to exaggerate profits since been removed from the expense of the statement of income and reported as asset on the balance sheet. For successful the fraud, it should

The video “Cooking the Books” discussed the ZZZZ Best case of fraud, it tells how and why fraud was perpetrated by Barry Minkow and why it was undetected for so long. According to the video, ZZZZ Best was founded by Barry Minkow in 1982; when he was sixteen years old, it started as a carpet cleaning company. But, due to high competition in the industry, low entry barriers, and bad internal control, this young entrepreneur started to have cash flow problems, thus creating a shortage of working capital. As a result of the financial pressure, he started to commit fraud by creating false accounts receivable and sales, false documents (using photocopies of real

a. They should use the resistance of meeting auditing standards and contributory neglegence. Stuart Supply Company management is responsible for the fraud. The fraud was complicated and difficult to discover, but the steps recommended by Lauren Yost & Co made it possible. The president of Stuart Supply Company ignored the proposal to count the inventory on the same day, and was therefore responsible to breakdown of detecting the fraud due to his decision. Luckily, Lauren Yost & Co can use his signed statement as evidence against him.

1) Anna Thomas committed a fraudulent act by making personal charges and cash withdrawals on Rusher Automotive’s credit card. The accounting profession believes there are three conditions necessary for fraudulent behavior. (See Statement on Auditing Standards No. 99, Consideration of Fraud in a Financial Statement Audit. For additional explanation, you may want to review Buckhoff [2001].)

They could just do the audit of the account payables and say that it only took the

6. Identify the accounting and auditing issue: (1) Crazy Eddie’s behavior of overstating year-end inventory is against GAAP requirements. (2)Management has the responsibility to fairly present financial statements in accordance with GAAP.