Case Study Audit

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

In 2011 twenty-five million Americans were taken advantage of. (Small, 2013) All twenty-five million were due to fraud, mainly seventeen types of fraud. (Small, 2013) These types of fraud were mainly, weight loss products, prize promotions, and work at home programs. (Small, 2013) However, in 1964 when a young Frank Abagnale Jr. set of on one of the longest crime sprees in history, the world of white collar crime was a lot different.

Based on the case given, the bank controllers were only instructed to monitor the net trading positions, but not the Dalta One traders’ gross exposure. The bank controllers did not inform their supervisors when they had noticed that Kerviel’s transactions were irregularities which involved an abnormally high amounts in his transactions as that was not the specifically part of their job. Thus, Kerviel able to use his knowledge of the company control procedures to hide his fake trades with his false documents and emails.

This paper introduces Bernard L. Madoff a fraudster who orchestrated a multi-billion dollar Ponzi scheme. The paper discusses elements that make up a Ponzi scheme and explains what a Ponzi scheme is. The paper goes on to introduce some of the victim’s and examines some reasons why someone might fall victim to a Ponzi scheme. The paper describes the three elements making up the fraud triangle and how they relate to the fraud and the fraudster. This paper covers Bernard Madoff’s background and history and how he committed the fraud analyzing the fraud triangle. The paper describes ways to correct the issue, accounting principles violated, and recommendations for a fix. Finally, the paper looks at internal and external controls violated and ends with a conclusion.

Read the David Miller case from Chapter 5. After reading the case, describe a reason why someone who has been entrusted with the firm’s assets would commit a fraudulent act against the company. Based upon your understanding of the case and your professional and personal experience, recommend a series of actions that should have been taken in order to pre

(TCO 5) Fraud is an intentional misrepresentation of facts, made for the purpose of persuading another party to act in a way that causes injury or damage to that party. In our readings and discussions we have seen several examples of fraud in business. Using that experience (1) provide an example of a common fraudulent practice in business with an explanation of how the practice works and (2) name and describe each of the elements of the Fraud Triangle.

card fraud. In reference to money Laundering we will the complex process of how criminals

88 Case 1.12 Madoff Securities Instructional Objectives 1. 2. To identify the principal precursors of financial fraud. To identify “red flags” or risk factors typically indicative or symptomatic of fraud.

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Fraud in the financial community is consistently hidden in "style." Since its beginnings in the "great depression," to now, "the great recession" fraud has undoubtedly taking many forms and styles. Subsequently, many non suspecting patrons have been severely damaged as result of this greed and corruption. Many of America's largest and most established individuals are not exempt from this form of style manipulation. As we will soon see, many individuals, including Bernie Madoff, have both the ability and incentive to commit fraud. In today's fast paced information age, fraudulent activities are now becoming more difficult to detect, and even more difficult to prove. To begin, I believe it necessary to show how fraud has affected our current economic state. I will then venture as to the means in which Bernie Madoff committed fraud and the implications on current business prospects.

In the case of Phar-Mor fraud, the company was involved in cover up and some accounts were created to hide the fraudulent activities. Bad inventory counts in the stores were made to help with the cover up and deceit about activities that cost hundreds of millions of dollars. (Williams, S.L., 2011)

The organizational structure of Phar-Mor was ineffective and lacked many control activities including: segregation of duties, authorization, documentary and IT controls. As a result, Phar-Mor’s president had a stronghold on certain upper level management and executives which gave him the opportunity to control the fraud and hide it from other members of the organization and supposedly Phar-Mor’s auditors, Coopers and Lybrand LLP.

Phar-Mor was known as one of the major discount chain retailers in the late 1980’s - early 1990’s. It was founded by Mickey Monus, a gambler in nature, who with the help of senior management was “cooking the books” for years to cover up his loses. The reason why senior management agreed to do this fraud is the belief in unique ability of their leader to fix everything later on. This case is known as one of the biggest accounting frauds in the corporate history of the U.S. This paper will analyze who was affected by this fraud, the motives behind it and what systems of control failed to prevent it.

The greatest opportunity for Minkow to commit fraud was ZZZZ Best’s lack of financial supervision. Lack of internal control facilitated manipulation of company’s assets and transactions. It gave the CFO the opportunity to falsify the documents and to create fictitious transactions. These transactions created formidable revenues on the company’s books and made it easy to borrow money from banks. The weak external audit was the other opportunity that allowed Minkow to commit fraud. The auditor was not familiar with the company and its related parties. In addition, the auditors placed too much trust in management produced documents and failed to verify key transactions. These two important reasons gave Minkow an opportunity to commit fraud.

It is clear from the case study that Alistair knows the contract is unorthodox. The problem he faces is whether he should overlook the bribe or report it to the board. The board of directors expects Alistair to tell the truth and report the bribe because of: his position as Chief Legal Officer, the board has a very strong ethics policy and they are wary of unethical activities.