ipl-logo

Zzzz Best Company Case Study

723 Words3 Pages

Case # 6: 1.9 ZZZZ Best Company, Inc.
1. AS 5.14
AU 316.02-.04
Consideration of fraud in a financial statement.
Auditors have responsibility to perform the audit and check the authenticity of the financial statements. Auditor should take into account the risk of fraud in a financial statement from management improper assertions. However, in this case the audit company ignored to examine ZZZZ Best’s financial statements. ZZZZ Best report its earning as billings in excess of costs and forecast revenue on restoration contracts. These contracts do not exist nor do the revenues. Actually, the auditor can confirm the contracts information by direct contact the alleged insurance carriers or go to the site to check. However, the auditors did not do that.
2. AS 12.01-03 Identifying and Assessing Risks of Material Misstatement …show more content…

They should identify and evaluate the risks of material misstatement. In this case, the cost of the electric generators on the balance sheet is $1,970,000, while the real price less than $100,000. However, the company never use these generators. ZZZZ Best just use these generators to boost the assets on the balance sheet.

3. AS 8.04 Audit Risk
The audit risk is that the auditor expresses inadequate audit opinions for the material misstatement of financial statements. The financial statements are not consistent with the true situation. In this case, the auditors failed to find ZZZZ Best’s insurance restoration trades was false and the contracts were completely fictitious. Minkow used the fake insurance restoration contracts to book the profits and earnings. The amounts of the insurance restoration contracts were impractical large.

4. AS 15.4-9 Evaluating the Sufficiency and Appropriateness of Audit

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

  • Navistar's Lawsuit Against Deloitte

    607 Words  | 3 Pages

    Navistar used warranty, rebate and improperly deferring start-up cost to hide the fraud. There are two types of warranties assurance type and service type. Assurance type warranties are issued with the product and service type warranties are bought separately. In Navistar’s case, the employees treated the warranties as service type warranty and deducted it from estimated warranty expense. There was no in flow of cash and Navistar had to pay for the repairs out of pocket.

    Read More

  • Court Case Of Fred Stern & Company, Inc.

    643 Words  | 3 Pages

    The Plaintiff counsel demonstrated that just by looking at the invoices, one would have revealed that they were fake. The invoices lacked shipping numbers, customer order numbers, and other information. The court ruled that given the suspicious nature of the large December sales entry recorded by Romberg, the court stated that Touche should have especially reviewed the December sales invoices. Touche auditors found many errors, while company’s inventory, that collectively caused the inventory account to be overstated by more than $300,000, an overstatement of 90%.

    Read More

  • Norman Broussard V. State Insurance Company Case Summary

    600 Words  | 3 Pages

    What are the issues related to this case/what do the interested parties want to see happen The Broussard’s lost their home is this tragedy and were hopeful that their insurance would provide some relief in rebuilding their lives. The insurance company did not plan to provide that

    Read More

  • Nvq Unit 6 Research

    1244 Words  | 5 Pages

    This coincides with 6.02 Maintenance, Dissemination, and Disposal of Confidential Records of Professional and Scientific Work. There are times when a situation is hectic and negligence can occur at that point of time. In class, lab results on printed-paper intended for the patient was given to another participant in class. They opened it up and saw all the information not realizing it was not theirs. They asked me about the results and I noticed it was not theirs.

    Read More

  • Mark Everson Candidacy

    580 Words  | 3 Pages

    They claimed "the company had coached clients on improper tax workarounds that cost the agency as much as $712 million in wrongly awarded refunds"

    Read More

  • Case Study: Dollar General

    760 Words  | 4 Pages

    1. In the broader context (not specific to Dollar General), what is KKR’s investment strategy? What are the challenges KKR will encounter to make its investment in Dollar General successful? How could KKR add value to Dollar General?

    Read More

  • Giant Consumer Products Inc Case Study

    807 Words  | 4 Pages

    Giant Consumer Products In the case of Giant Consumer Products, Inc. (GCP), the background of this supermarket’s performance, specifically in the Frozen Foods Division (FFD), is reviewed and applied to promotional marketing decisions. Presented by Harvard Business School in 2012, Giant Consumer Products: The Sales Promotion Resource Allocation Decision provides a comprehensive overview of GCP’s overall financial stature, with insights into its FFD including industry and company context, promotional planning, execution, and allocation (Bharadwaj & Delurgio, 2012). In pursuit of further analysis, GCP’s case background can be reviewed and summarized by conducting a situational analysis, determining the core issues, evaluating alternative solutions, and providing concluding

    Read More

  • Financial Case Review: The AIG Scandal 2005

    703 Words  | 3 Pages

    Therefore, there were a few steps taken by Greenberg and Ferguson to make CRD paid $10 million without really paying. Firstly, General RE paid only $7.5 million to commute the existing contract with HSB. Secondly, General RE paid a premium of $9.1 million to NUFIC to reinsure the HSB losses which were just commuted. Thirdly, CRD paid its parent company, General RE a premium of $0.4 million for a fake reinsurance contract. Fourthly, GRD received a loss payment of $13 million from General RE.

    Read More

  • Income Smoothing Case Study

    1491 Words  | 6 Pages

    The fraud triangle is made up by three distinguished elements. These elements in the fraud triangle consist of pressure, opportunity, and rationalization. The overall representation of the fraud triangle can be seen as the specific model to spot any type of high-risk unethical and fraudulent performances being conducted by a company, in this case Cendant Corporation. Cedant Corporations actions can be analyzed by the fraud triangle by the way that their senior management/top management decisions fell into the three categories of pressure, rationalization, and opportunity. Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image.

    Read More

  • Describe The Rationalizations Used By Mr Pavlo

    425 Words  | 2 Pages

    He also rationalized his fraudulent activities by hiding the customer’s late payment in order to be benefitted himself, but said that he was helping people more than he was helping himself. 2. Given that Mr. Pavlo’s fraud was restricted to an accounts receivable embezzlement scheme, what symptoms might auditors observe?

    Read More

  • Case Study: Jo Malone Company

    1532 Words  | 7 Pages

    4.2.1 JO MALONE 4.2.1.1 Strategy Jo Malone Company takes its name from the brand creator. Jo Malone was a stylist that wanted to give a special present to her VIP clients, creating a special bath oil with natural ingredients like nutmeg and Ginger. (Gordo, 2013) Jo Malone London was created to celebrate British style with unexpected fragrances and the elegant art of gift giving.

    Read More

  • Tesco Accounting Report

    1656 Words  | 7 Pages

    Introduction The main objective of the paper is to develop a report for a shareholder that will interpret financial statements of Tesco Plc. for 2013-2014. The shareholder is specifically concerned about the fraudulent reporting. In this way, the paper will explain the reason of income statement and statement of financial position.

    Read More

  • Case Analysis: Case Study: Kraft Heinz Company

    1823 Words  | 8 Pages

    Kraft Heinz Case Study Executive Summary Problem Statement The focal problem that Kraft Heinz Company (KHC) faces is the decrease in demand of packaged-foods, while trying to increase revenue. Analysis This analysis studies Kraft Heinz Company’s strategy, competitive position in the market, problems being faced, and the company’s financials.

    Read More

  • Case Study Analysis: Zara Fast Fashion

    1715 Words  | 7 Pages

    Resource based view is the tool that is used in order to evaluate the resources that are important for the organisation to make their performance effective. It is regarded as a significant approach that is used by the organisation towards attainment of competitive advantage. The aim of this paper is to evaluate the resource based view literature and then applying the knowledge on the evaluation of a case study organisation. The selected organisation is Zara Fast Fashion, which is analysed with the help of use of RBV towards achievement of sustainable competitive advantage. The theoretical concepts of the resource-based view is analysed and applied on Zara as a real world example.

    Read More

More about Zzzz Best Company Case Study

Open Document