Accounts Case Study: Crazy Eddy Inc.

Prepare common-sized financial statements for Leslie Fay for the period 1987–1991. For that same period, compute for Leslie Fay the ratios shown in Exhibit 2. Given these data, which financial statement items do you believe should have been of particular interest to BDO Seidman during that firm’s 1991 audit of Leslie Fay? Explain.

Our project team analyzed the Fraud and Illegal Acts Case (True blood Case Studies- Case 08-9), which involves a questionable sales transaction made between Jersey Johnnie’s Surfboard, an SEC registrant, and Mr. Sinaloa, an independent sales representative of the company. As a simplified overview of the case, an external audit firm was hired on to perform a year-end audit of Jersey Johnnie’s Surfboards, Inc. Towards the end of the audit, the engagement partner notified the auditors that there could be a possibility of fraud and illegal acts made by the company.

(2000) was able to conclude that Independence together with activity of the Audit Committee is associated with a lower incidence of AAER For control variables, growth of company or the CEO as Chair of the Board resulted in a greater incidence of fraud. Klein (2002b) report of studies carried out on corporate governance mechanism and abnormal accrual in the books established negative relationship between board/audit committee independence and abnormal accruals. No evidence between having all independent audit committee and abnormal accruals. Changes from majority independent boards and/or audit committees result in as significant increase in abnormal accruals. Percentage of CEO holdings is not

Cases of fraud have been increasing over the years, and different agencies and authorities that have the task of subduing fraud have to get involved and put a stop to it. In the instance of which fraud has been uncovered, it is crucial to be aware of the red flags that were present in relation to fraud and associate them to the factors related to the fraud risk assessment. As Troy Gillard states in the Rd news magazine, a man that broke free after being acknowledged as suspicious when he wanted to take a loan out at the Cash Canada using a stolen ID amongst other official documents that had been stolen. It seemed that the ID and the other documents

Elder, A. A., Beasley, M., & Elder, R. J. (2014). Auditing and assurance services (15th ed.). Upper Saddle River, NJ: Pearson.

My question for the Leslie Fay Companies case focuses on the actions of Paul Polishan and the effect his self-established tyranny over the financial information of the Leslie Fay Companies would have on the auditing process. Paul Polishan, a 1969 accounting graduate, was hired by the Leslie Fay Companies right out of college. The Leslie Fay Companies made women 's clothing, particularly focusing on

1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm possess a higher-than-normal level of audit risk.

As more people were paying attention to Crazy Eddie, Auditors were called in, fooling them was just another part of the Antar con. As things heated up with Crazy Eddie, Victor Palmary, made a move to buy the company in 1987. He got his wish, 20 days after the acquisition, he discovered the problem he just inherite when he ordered his staff to take inventory. Only weeks after taking over the chain, he discovered empty warehouses and inflated earnings. The SEC, the US Postal Office and the Justice Department came crashing in. Sam was under fire from all sides, found himself alone and Eddie was long

This case study was developed as a joint effort by the Center for Audit Quality,

Boynton, W. C. (2006). Modern Auditing (8th ed.). Danvers, MA: John Wiley & Sons, Inc.

This case has two learning objectives. First, it provides the student an opportunity to apply auditing concepts to a “real-life” audit client. The client, Biltrite

Today, a wealth of information is easily accessible to the fraud examiner online. However, an effective investigator will conduct searches using the Internet efficiently and legally. While there are many resources available on the Internet, it would irresponsible to assume that everything is true and accurate – therefore it is vital to verify. In the following, ten online sources of information will be profiled, detailing each’s strengths, weaknesses, and cost to the fraud investigator.

We must first understand the meaning of ‘fraud’ and some motivations behind the commissions of such acts. I want to first start by defining fraud to get a deeper understanding of what this paper would be talking about.

Albercht, W. S., Albercht, C. O., Albercht, C. C., & Zimbelman, M. F. (2012). Fraud Examination (4th ed.). Mason: South-Western Cengage Learning.

(a) Explain the external auditors’ responsibilities in relation to the prevention and detection of fraud and error.