A Lettler from Prison

By manipulating the financial statements, the company gave a false impression on its future prospects of the company, allowing them to more freely raise capital through the issuance of common stock, and inadvertently inflating stock prices.

There are three models of prisons that have been prominent in American since the early 1940’s: custodial, rehabilitative, and reintegration. Each model is designed differently based on its overriding goal, and this affects the physical design, policies, and programs that are implemented within each of the models.

Such an intense focus has been placed on quarterly earnings as an indication of a company’s success by everyone from analysts to executives that ethics have for the most part been thrown out the window, sacrificed to the all important number, i.e. earnings per share. This is the theory in Alex Berenson’s book “The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America.” This number has become part of a game to be played, a figure to be manipulated – beat the number and Wall Street all but throws a parade, miss it and a company’s stock may be abandoned. Take into account the incentives that executives have to beat the number and one can find plenty of reasons to manage earnings.

A1. The Nature of the incident was that an employee was able to hack into the computer system and gain access to the financial payroll system, human resources and even email system. This employee used several methods in order to gain access into the system: IP spoofing, Data modification, Man in the middle attack and compromised-key attack. As a result the employee was able to tamper with payroll system. An auditor discovered the discrepancies and tried to make upper management aware of the situation through email, but the email was intercepted by the hacker. The hacker impersonated an employee and persuaded the auditor into granting him more access into the system which resulted in additional sabotage into the payroll system. Hacker

1. My entire career was spent at Computer Associates and while I can’t tell you first-hand about the pressures in other companies or industries I believe that CA was among the most aggressive in its pursuit of goals, a fact often relayed to me by my industry peers. Both the CEO and I exerted significant pressure on our teams to meet the goals that we had set for ourselves. As you would expect this has a trickle-down effect to others in the organization. While from this perspective performance was measured by internal goals at an executive level these targets were primarily driven by the expectations set by outside parties, primarily the analyst community. While institutional investors were very important their buy, sell, hold decisions

In order to find out the factors that caused the less actual quarterly income, we did analysis on variances. Sales variance, production cost variances and overhead variances are calculated as follows:

There are several challenges in using financial information from previous periods in this audit. Mainly, the fact that Michael and Brian performed the audits of the previous year’s means that they are biased to believe and trust the information unequivocally. Secondly the fact that CMD was committing fraud by fabricating and destroying evidence and in some cases their third party clients were colluding along with them makes the evidence not trustworthy. An example of this is in the sales returns and allowances. Using the $4.5 million number and not accounting for the $5.3million fourth quarter number. This would seriously affect the company’s liquidity activity ratios Also, using the $7million figure that Michael and Brian came up with, when the number was actually $12million is a huge misstatement

For example the extra charge for maintenance accumulated from last year and for this year should be equally divided and not charged to the first quarter only. Similarly, cost of relocating the Southern Paper Sioux Springs office that has been charged to the first quarter, had been the expenditure incurred last year. It should not have been included in the first quarter. No doubt these are good accounting practices but nevertheless reverting the charges to their respective results would not compromise GAAP practice. Unrealized income would be better off transferred to the next or the last quarter as the income received would not materialize until at the end of the year. Including the dividend from the company's Brazilian unit would not help increase profitability at the end of the year unless the company is assured of its profitability. As of now it needs to balance its accounts before it can estimate correct profit level at the end of the year. With regard to the obsolete inventories, there is no alternative course of action but to write-off from this

I remember a time when I was working on the med-surg floor. We had an inmate who was admitted as a patient with cirrhosis of the liver to remain in the hospital for a while when an inmate is admitted they are automatically placed on opt out list which means no one cans know he is in the hospital not even a family. Well on this particular day his son somehow I found out where he was located he attempted to go to the room and the guard would not let him in the room. The sun became very loud and shouted you go to let me in that room or I am calling my boys. It was apparent he was in a game we all was afraid he was going to shoot the place up I happen to be patient I called security which seemed to make him even madder once they got to the floor

The auditing firm has been in engagement with the company throughout the period when the fraud was being committed. One of the common and clear indicators of possible fraud was the company’s cash flow statement. The company experienced positive growth in its profits from the year 1996 through to the year 1998. However, a close analysis of the cash flow statement shows that the company had experienced negative figures of cash flow from both operating and investing activities and positive cash flow from financing activities which would not sufficiently offset the negative cash flows from operating and investing. It is therefore evident

The reason for this kind reporting is largely due to the nature of their main capital provider, the bank. The bank is not necessarily concerned with their positive future outlook, they are likely more concerned with their debt to income ratio, equity, and liabilities. This kind of accounting information gives a better estimate if the company will be able to sufficiently meet their new obligation in the form of bank financing.

Option three is not viable as disclosing his criminal past to individuals without a vested interest will create both direct and indirect consequences for the firm. Thus, option three will not be

Qwest had still more revenue-recognition tricks up its corporate sleeve, such as adjusting the publication date of its Yellow Pages directories to shift revenue from one quarter to another. In fact, as a general rule, it’s safe to say that companies rarely play just one accounting game. Games tend to come in clusters, so when you spot one, remember the cockroach theory: If you see one, you can be pretty sure there are many more hiding in the dark.

Revenues for license fees should be recognized when the product is delivered. This practice is in accordance with common industry practice and provides a more accurate accounting of when revenue is earned by the company. The current policy for recognizing revenue when the contract is signed as an accurate time period indicator is clearly contradicted by the associated receivables being outstanding in excess of 160 days. As industry norms indicate an average of a 62 day collection period, this indicates that the contract date is not a reasonable basis for estimating the degree of collectability for the receivable and that more accurate estimate measures exist.

Dismiss Mr. Deles without getting any pay back or pension from Dyners Corporation. It is the consequence for being dishonest in the company. His pension or pay back that should receive will be the payment for the big loss of the company due to his stealing.