Case Study Of Parmalat Scandal

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Corporate accounting fraud is the major factor that has led to the collapse of many companies, one of which is Parmalat company scandal. The Parmalat group, a world leader in the dairy food business, collapsed and entered bankruptcy protection in December 2003 after acknowledging that billions of euros were missing from its accounts. Its collapse had been labeled as “European Enron” and has led to a deep questioning of the reliability of accounting and financial reporting standards as well as that of the Italian corporate governance system. Therefore, this paper has discussed, firstly, what factors have allowed fraud to occur in Parmalat. Secondly, how the fraud could have been avoided from happening in this company. Thirdly, has discussed some red flags that indicate fraud was occurring in the company. Lastly, the paper has discussed some of the lessons that can be learnt from the Parmalat company scandal.

Keywords: Parmalat, Fraud, Bonds, Banks, Missing funds, collapsed.
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Without understanding the company financial condition he acquired many companies in the food industry which resulted in financial losses. Also he manipulated financial reports in order to hide losses. Tanzi further, diverted 500 million euros from company reserve to Parmatour (which belonged to his daughter) without taking approval from shareholders and stakeholders.
Second person involved in the scandal was the CFO of the company- Fausto Tonna; he was completely dependent on the internal auditor, without even checking the company books that were handled by the auditor. He also announced a bond issue of 500 million euros, without informing the shareholders, stakeholders and other

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