Campbell Soup Case Study

1. The three aspects of fraud - Perceived pressure, Rationalization, and Opportunity were present in the CIT case as follows:

7. List some of the risk areas that can be identified through the auditing process.

Professional auditing standards discuss the three key “conditions” that are typically present when a financial fraud occurs and identify a lengthy list of “fraud risk factors.”

Although this practice was not fraudulent, the plaintiffs insisted that Campbell had a responsibility to record a reserve or allowance in anticipation of substantial customer returns likely to result from theses “sales.” Despite the fact that a large percentage of product sold under guaranteed sales contracts was returned, the company’s accounting staff apparently never recorded appropriate reserves for those sales returns. The plaintiffs charged that PwC must have known about Campbell’s bogus sales, but

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

In looking at the facts of the case PwC was the accounting firm to Anicom. Anicom was in an agreement to purchase Tricontinental Industries in exchange for cash and Anicom stock. During these negotiations Anicom was involved with improper accounting procedures which resulted in meeting sales and revenue sales. This included a fictitious sale. PwC became aware of the practices when investigating an Anicom branch. PwC altered the CFO of Anicom, noting that the issue at this branch could be occurring at other branches. However, PwC failed

Employee fraud often takes place when pressure (motivation), opportunity and rationalism are present. In fact, employee perception where failure to meet sales target might leave them unemployed and unable to settle bills for their family (Kelly, 2016). Furthermore, watching other co-worker committing fraud will most likely influence the employee to do the same because their mindset tends to persuade themselves that it is one of a way to meet their quota plus “everyone is doing it.”

We received communication from our sales team in reference to the DOR swap for DIRECTV commercial account Campbell Soup. The account will currently stay with Platinum Communication Co as the installing dealer. If the customers contact you to set up a service call please let us know and we will reach out to the servicing installer Platinum Communication Co.

2. Identify and briefly describe the specific fraud risk factors present during the 2000 NextCard audit. How should these factors have affected the planning and execution of the engagement?

List the fraud risk factors that the CPA firm might encounter if they accept this audit engagement. Be sure to include a discussion of all items that will probably require special attention during the audit. For each of these fraud risk factors, indicate how the auditor should follow up on each potential problem if the engagement is accepted. Use the following format:

Some industry-specific factors, such as having valuable near-cash assets, can increase the organization's vulnerability. Also they will need to rationalize the actions as justifiable. The individuals committing the fraud must first convince themselves that their behavior is acceptable or will be temporary. For example, Barry Minkow’s believed that the lies and deceit are for the betterment of his company and that with time everything will eventually return to normal.

Fraud Risk: These weakness affects all levels of the internal control environment and other areas of the company. It shows that internal controls are not as important as meeting the company’s performance outlooks. If management does not openly display ethical conduct, the expectation of fraud and misappropriation

The second part is opportunity. The opportunity to commit fraud usually arises through weak internal controls.

“The first leg of the fraud triangle represents pressure. This is what motivates the crime in the first place. The individual

The Campbell’s Soup Company was founded in 1869, in Camden, New Jersey, USA by Joseph A. Campbell. It is globally recognized as a good quality, branded convenience food manufacturer and distributer. This company’s recognition and strength relies on three major business segments- Sauces and Soups, Confectionery and Crackers and Away from Home Meals. Joseph Campbell had originally introduced this company as a producer of canned soup, tomatoes, jellies, vegetables and meat.