Don Barry Minkow 's Fake Insurance Restoration Business
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After reading the case, it was truly fascinating how a very young man, Barry Minkow, could pull off such a huge fraud and how greed and audaciousness can make someone become so unethical. The fact that a young man had a goal and would do everything and anything to make sure he reaches his goal led him to commit fraud through his fake insurance restoration business. It all started when he was 15 years old and was driven to be successful, so he began a carpet cleaning business but soon came to realize that he would make it big if he were in the insurance restoration business. The way he gained customers for his business was by calling channel 4 in Los Angeles, pretending to be a fact customer, and explaining to them how the 16-year-old owner…show more content… This shows that Minkow is an egoist because his only concern was himself and how he could benefit himself and did everything to make sure he was continuing to make money. He defies the 6 Pillars of Character, which are trustworthiness, respect, responsibility, fairness, caring, and citizenship. As the case was briefly explained Barry broke each pillar by lying to everyone and creating the phony company. He was also lying about his revenue and overcharging customers for services, which is unfair because he is stealing from people who trusted him. He had the responsibility to do what was right and didn’t because he didn’t care about anyone but himself and becoming successful.
Since the auditors failed to do their job properly, they should be held liable for failing to plan and perform the audit to discover material fraud. The red flags the auditors should have picked up when conducting the audit included rapid growth, bank transfers and other accounts, the avoidance of confirming the insurance restoration jobs, consistency of all the invoices, extravagant life style, cash flow problems, and problems meeting loan payments. Also the auditors never looked at construction contracts, issues, and whether ZZZZ Best had the necessary permits to do the work. This shows the auditors failed to exercise professional skepticism.
Due to the failure of the auditors the customers and banks were