Kathleen Ng ACCT 4501W Case Analysis 1 ZZZZ Best Company, Inc. ZZZZ Best Company, Inc. was founded by Barry Minkow in the fall of 1982, located in San Fernando Valley of Southern California. At this time, he was 16 years old and started a small carpet cleaning operation out of his parent’s garage. Due to client complaints and competition, he was short of capital and needed money but was unable to get help from banks due to low profitability. This led him to think of other ways to finance his business
ZZZZ Best Company Inc. Introduction This paper explores the ZZZZ Best Company which was begun by a 16 year old individual who was able to pull the wool over the eyes of many customers, investors and auditors. This paper will define the difference between review and audit when it comes to financial reports, comments on the procedures provided with regard to the management assertion of occurrence, verification of payments for jobs and how they can lead auditors to improper conclusion, the purpose
Case 1.9 ZZZZ Best Company, Inc, 1. Ernst & Whinney audit firm suffered tremendously from the backlash of ZZZZ Best’s case. One of the issues stemming from ZZZZ Best’s case is the difference between a review and an audit as evidence by civil suit filed by a California bank against the firm. The bank claimed that its decision to grant ZZZZ Best’s loan was based on the opinion of Ernst & Whinney review of ZZZZ Best’s financial statements period ending July 31, 1986. The case was ruled in favor
obtaining an understanding of internal control structure. Also, a review does not assess control risk, tests of accounting records and responses to inquiries by obtaining corroborating evidence through inspection, observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any misstatements on the financial statements
Case 1.9 ZZZZ Best Company, Inc. Delta. Describe the elements of the Fraud Triangle that apply to this case. Assume you are the perpetrator. Is there a better way to perpetrate this fraud? If there is, describe your method. Specify practical recommendations for the client to prevent this fraud from occurring in the future. The first element of the Fraud Triangle in the case of ZZZZ Best, case 1.9 is Incentives/Pressure. Incentives/Pressure- As a result of the pressure placed on a person who
pipes, and sold directly either to industrial customers or to regional gas utilities, which then distributed the gas to smaller businesses and customers. Some companies in the industry had assets related to specific activities within the supply chain. For example, some companies owned pipelines but did not produce their own gas. These companies often entered into Enron 2000 annual report, p. 7. Joseph F. Berardino, remarks to U.S. House of Representatives Committee on Financial Services, December 12
ZZZZ Best, Inc. The start of ZZZZ Best: ZZZZ Best started as a carpet cleaning company. Barry Minkow founded ZZZZ Best in his parents’ garage in 1982 when he was only sixteen years old. Due to high competition in the industry, low enter barriers, and bad internal control, this young entrepreneur started to have cash flow problems, and a shortage of working capital. Pressure Leads to Fraud: Under financial pressure, Minkow started to commit fraud. He forged credit card applications, staged
Barry Minkow – Misrepresentation and Ponzi in 1987 Establishment of ZZZZ Best Company When he was a sophomore in high school, Barry Minkow founded a carpet cleaning company - ZZZZ Best Company in his parents’ garage. At that time, the carpet cleaning industry has few entry barriers and all Minkow needed was a small amount of start-up capital. However, he soon found out that his firm was actually tough to survive in the industry as the ease of entry means fierce competition. The young man encountered
------------------------------------------------- ------------------------------------------------- ZZZ Best Company, Inc. ------------------------------------------------- Case Study 2 ------------------------------------------------- Due Date: March 30,2010 ZZZ Best, Case 1. Ernst & Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31, 1986. How does a
News (60 Minutes), Barry Minkow, the founder of ZZZZ Best Carpet Cleaning Company said "I started with the best of intentions, really I can say that. And when economic pressure reared its ugly head and I couldn't make payroll, I lied and stole and cheated." Prior to declaring bankruptcy, ZZZZ Best was one of the hottest stocks on Wall Street and Barry Minkow was known as the boy wonder of Wall Street. As the youngest CEO of a $300 million company Barry Minkow was the American Dream come true: a