ipl-logo

Case Study Royal Ahold Scandal

925 Words4 Pages

Overview:
Ahold was a major retailer in the US and Europe. The accounting scandal that took place at Ahold 's US Foodservice financially destabilized the company and also had very adverse effect on its share price and market standing.
The company was forced to order an internal investigation due to this scandal which also revealed other irregularities at its operating companies spread across US, Latin America and Europe. The series of frauds and mismanagement affected the company’s reputation very badly. Ahold then forced its top management to resign. Post that, a new management and a forward-looking strategy have brought the company back from the brink of bankruptcy.
Case Details:
The scandal was that, Royal Ahold, a food retailer in the Netherland had overstated their profits by as much as half a billion dollars. In reaction to this news, the stock of Ahold at Amsterdam Stock Exchange took a dive of nearly 55 per cent in a single day on Monday the 24th February. This scandal is known as “Europe’s Enron” in US. …show more content…

But at the time that Ahold announced that it had to restate its financial results, the annual report had yet to be released. Therefore, the annual report that Ahold published later is actually the audited and corrected version. The corrections are made in this version based on the various investigations and audits performed within Ahold internally and all of its subsidiaries at that point of time. The 2002 annual report was finally published very late in 2003 on October 2nd. Ahold got approval from its shareholders, to be able to delay the publication of its annual report this much, on May 13th of

Show More
Related

  • Barry Minkow: Identify The Affected Party In The Case

    867 Words  | 4 Pages

    An appellate court ruled neither Ernst nor its partner was liable to Union Bank of California (American Institute of CPAs, 1991). ZZZZ Best's financial statements for the three months ending July 31, 1986, were audited by Ernst & Whinney. A preliminary prospectus for Z Best's $100 million stock offering included a draft copy of this review report. Union said it extended credit to ZZZZ Best based on its preliminary prospectus, Ernst's oral representations about ZZZZ Best's growth, and Z Best's professional reputation. It was Ernst & Whinney's unprofessional attitude toward the ZZZZ Best audit that damaged the company's reputation.

    Read More

  • Mickey Monus

    742 Words  | 3 Pages

    Two days later, the Phar-Mor board confronted him with two books that had been found. The board had found that one of the books had largely inflated profits. This revealed that with the board, banks, and investors deceived, Monus was able to pull in more pay and sell stock at inflated prices to keep everything afloat. “To cover up the continuing losses, Pat Finn was now faxing falsified financial reports to the board of directors and to David Shapira every week. But in November of 1990, a secretary mistakenly faxed a report with the real numbers to Shapira.

    Read More

  • What Caused The Sarbanes-Oxley Act Of 2002

    71 Words  | 1 Pages

    The financial scandals in early 2000s caused the Sarbanes-Oxley Act of 2002 to be created. Enron, WorldCom and the accounting firm, Arthur Andersen, to intentionally mislead their shareholders by exaggerating their profits and understating their expenses. The scandals had raised the importance of internal control for enhancing corporate governance. Therefore, the government established the SOX to protect the interest of the investors and employees and to monitor the companies and auditors.

    Read More

  • The New York Conspiracy Trials Of 1741 By Daniel Horsmanden

    431 Words  | 2 Pages

    In the 18th century America, a great division existed between the majority of blacks whom many were slaves, whites; men and women; and the upper and lower classes. New York City in 1741 had an economic decline intensified conflict between slaves involved in marketable activity and working-class white colonists who felt as if their jobs were threatened. These two types of people were competing against each which caused a chaos. To make things worse Britain had gone to was with Spain, and Spain promised the slaves for their freedom which made them turn their backs on Britain. This trial is similar to the Salem witch trial where they persecuted, many of who were slaves and a few poor white men.

    Read More

  • History Of The Cossack Scandal

    299 Words  | 2 Pages

    On may 17th a brawl broke out at a twin pecks restraint between two rival biker gangs according to CNN.com 480 weapons were recovered and 177 bikers were arrested the brawl broke out between The Banditos who was formed in Houston back in 1966 and The Cossacks. The start to this brawl is unknown but many say the the Cossacks were invited for a sort of peace treaty but then things took a violent turn when some words where exchanged turns out some of the Cossack bikers were all ready at the restraint and when the Banditos arrived one of their members hit a Cossack member and that is what started the brawl. The scene was described as streaks of blood and pools of blood everywhere. Now you could be asking what was all this for well with gangs it’s

    Read More

  • Wells Fargo Fraud

    496 Words  | 2 Pages

    This is a cautionary tale of how corporate crime can cause severe harm. The shareholders were prevented by those perpetuating the fraud from selling while the stock was falling, while at the same time they moved their money out of the company. The final outcome was that the perpetrators being Jeff Schilling CEO, Ken Lay, and chief financial officer Andrew Fastow each received hefty sentences. According to CNN, Skilling was originally sentenced to 24 years, the longest sentence of any Enron perpetrator, and has been incarcerated in the federal prison system since his 2006 conviction. He had been facing a release date of Feb. 21, 2028,” (Smith).

    Read More

  • Struggles In The 1920s

    1671 Words  | 7 Pages

    During the decade the United States stock market began to undergo an extreme expansion. So much so it seemed that investing in the stock market was the only way to make quick money. It was popular as it wasn’t only for the rich it was something that even ordinary citizens could partake in to make money. Although this seemed to be an extreme financial gain for the country the lure didn’t last long. Inevitably prices fell into their expected decline leaving millions of shareholders left rushing to liquidate their holdings.

    Read More

  • Enron Analysis Essay

    887 Words  | 4 Pages

    Enron Analysis Enron is a great play which presents a dry story about business in a colorful and cartoonish way and impressed me with a variety of elements, including video, music, choreography, and dance. This is a play depicts the spectacular collapse of a Texan energy giant-Enron. As an audience, I witnessed how a business empire was built on shadows, accruing debts of 38 billion dollars and finally going bust in this two hours and thirty minutes play. In the following passage, I will describe, analyze, and interpret this play both about its script, including characters and plots, and its production, such as the videos, stage props and customs.

    Read More

  • Financial Case Review: The AIG Scandal 2005

    703 Words  | 3 Pages

    The AIG Scandal 2005 started when AIG management was issuing a press release describing its third quarter earnings in 2000 to the public. The report showed that the premium of AIG was significantly increasing, while its loss reserves was decreasing by $59 million. However, according to many industry analysts, along with the positive earnings, AIG in fact should show an increase in its loss reserves as well. This caused the investors of AIG suspected that AIG was drawing down its loss reserves to boost its profits. The suspicious of the investors has unfortunately led to the falling of AIG stock price from $99.60 to $93.30 on New York Stock Exchange (NYSE).

    Read More

  • Income Smoothing Case Study

    1491 Words  | 6 Pages

    This proves that throughout the case, Cendant Corporation wasn’t acting fully ethical nor with the desired fiduciary actions to their investors and the auditing team in this case being Ernst&Young. Aside from the trust being broken apart between both, there was never a sign of an internal control inside Cedant. Therefore, there shows that the corporate governance for Cendant Corporation didn’t have signs of existence as well. Most frauds that were occurring before the implementation of the SOX-2002, had top management such as in Cendant that didn’t have care for the ethical performances as much as in today’s corporate world with more regulations in hand by the government. At the end, Cendant had filings against them concerning their corporate governance

    Read More

  • Professional Scepticism In Auditing

    860 Words  | 4 Pages

    However, the corporate collapse of HIH Insurance in Australia has raised more questions than answers regarding the integrity of the accounting and auditing profession. The audit expectation gap is the difference between the actual performance of an auditor and what society thinks. According to the American Institute of Certified Public Accountants in 1992, the expectation gap is defined as the difference between what the public and financial users think audit responsibility is and what the auditors think their role is(?). The importance of professional scepticism is essential in enhancing the societal view on auditors. An auditor supplies the independence and objectivity to a financial report complementing the high expectations of third party users

    Read More

  • Lehman Brothers: Financial Fraud In 2008

    2178 Words  | 9 Pages

    Conclusion After reviewing the information obtained through this report, it highlights the lack of regulation and their accounting practices which took place within Lehman Brothers. The accounting practices that were used within the bank were set by the tone at the top and show that the CFO’s during the 2000’s and going forward had plenty of knowledge of the Repo 105 transactions and had no great will to do anything about. The thinking at the time seemed to be, that the company had used this accounting practice for so long, that if there was something wrong it would have come up by now no point rocking the boat.

    Read More

  • Ethics And Moral Issues In The Enron Scandal

    931 Words  | 4 Pages

    In this Enron Scandal ,several moral issues and values are being discussed .The moral issues is the misconduct of code of ethics by management level of a corporation , violation of code of professional ,ethical dilemma that faced by a management level when involved own interest . The first moral issues that discussed in Enron Scandal is misconduct code of ethics by management level of a corporation .In this case ,the mastermind of this scandal is the company CEO , Mr .

    Read More

  • The Worldcom Fraud Case

    2107 Words  | 9 Pages

    Background WorldCom, once known as one of the most powerful telecommunication organizations of the world, is now studied as a case of a fraudulent company that carried out unethical financial activities to cover its weakening position in the market. After some aggressive investment decisions, the company started to witness huge financial pressure. The management used various forged accounting entries to conceal its weakening position. Cynthia Cooper, Vice President Internal Audit, discovered the unethical activities and raised the issue with the management and relevant departments and received bitter responses. She carried out internal audits in her own capacity with her colleagues and compiled evidence against fraudulent activities.

    Read More

  • A Brief Summary Of BCB Future Production

    1547 Words  | 7 Pages

    Brief summary British Columbia box limited Vancouver factory was headed by the plant manager Mr.PaulFlynn. BCB also had sister plants in Burnaby, Vitoria and Toronto .BCB was a part of large international company which specialized in manufacturing of packaging materials . Paul was looking for new machinery in early 2002 as the current machine was 18 years old and it demanded huge investments in terms of maintenance. He also wanted to expand his business and hence was looking for a machine with higher productivity.

    Read More

More about Case Study Royal Ahold Scandal

Open Document