Financial Statement Fraud Schemes Essay

Phar-Mor, Inc was a thriving discount grocery store in the late 1980’s. Phar-Mor was moving product quickly but profit margins were not significant enough to pay the bills. By the early 1990’s, Phar-Mor declared bankruptcy due to fraudulent financial reporting and misappropriation of assets, making it one of the largest frauds in U.S. history. Below, we will use auditing standard AU 316.85 Appendix A in conjunction with the video “How to Steal $500 million” to analyze how incentives/pressures, opportunities, and attitudes/rationalizations allowed for fraud to start and continue at Phar-Mor.

The early warning signs of fraud are, usually, always ignored. There are warning signs for every type of fraud out there. To understand the warning signs of fraud, we must first know what fraud is. Fraud is the intent to trick someone or lie to someone in order to receive financial gain. This definition varies depending of the type of fraud used, but the person committing the fraud is always looking for financial gain. There are many types of fraud out there. You have Medicare fraud, internet fraud, mortgage fraud, loan fraud, tax fraud, embezzlement, forgery, insurance fraud, and marriage fraud. These are only a few types of fraud. There are many more types of fraud out there and new types of fraud are being committed every day. This

Have you ever seen someone wearing a very rare pair of shoes that you have never seen before? Have you ever wondered how they got these shoes and how much they cost? Believe it or not Nike’s Air Jordan line of shoes has been at the forefront of a decade-long sneaker craze, which has grown so much it has become its own stock market. Jordan’s have been popular for many years and it is shown throughout pop culture, the increase in price and demand, the resale market that has skyrocketed in the last five years, and the history behind the shoe that made them so popular. Jordan’s are very well advertised through several popular outlets.

After thoroughly understanding the operation of the Apollo Shoes, we will be able to determine the frame under which “fraud” can occur. The second step consist of the testing the journal entries. In this we will select the transactions occurred in the financial reporting year and will check the same, for the reason of their occurrence and supporting documents of the same. If during the test any misstatement is identified, the management will be asked to rectify the same and appropriate adjustments are done.

The following memo aims to outline the results of the audit of Apollo Shoes, give recommendations to improve the company’s operations, and provide justification for our qualified opinion.

Accounts Receivable, Other Receivables, Allowance for Doubtful Accounts, Bad Debt ExpenseInventories and Reserve for Inventory Obsolescence

Property and Equipment—Depreciation and amortization are provided on a straight-line basis over the estimated useful fives of the assets. The following table shows estimated useful lives of property and equipment.

The amount listed is the enrollment agreement was 10,020.00 which gives a difference of :

We have audited the accompanying balance sheets of Apollo Shoes, Inc. as of December 31, 2008, and the related statements of income, comprehensive income, shareholders’ equity, and cash flows for the year ended, and related notes to the financial statements. We have also audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Apollo Shoes, Inc. maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in

Our firm Assurance service is performed by our professional CPAs, possessing the goal of improving Apollo Shoes financial information or the contest of the financial information so that management decision-making can make more informed and making better decisions. Our CPAs provide professions and independent opinions that reduce the information risk that will come from incorrect information. Our professional CPAs performing the audits are

* This results in an addition to accounting income to arrive @ taxable income in the current year, because the expense is not yet deductible.

A statute of frauds act as a defense anytime a breach of contract occurs. This type of contract doesn’t create void, but it makes some type of contracts to be voidable. Also, it is important to understand that during statute frauds; contract writing doesn’t have to be formal the only purpose of this writing is to show and prove the agreement between the two parties who are in the same agreement. After the written agreement, the parties must sign in other for it to be affective, and enforceable if breach of contract happens. Furthermore, different states have their own statute of frauds laws which are enforce differently in jurisdictions. To the best of my knowledge, this law was created to prevent fraudulent behaviors from any parties. Statute

Many organizations have been in the news over the past few years due to accounting ethical breaches that have affected their customers, employees, and the general public. I searched the Internet to locate a story in the news that depicts an accounting ethical breach. I selected Krispy Kreme. I enjoy their hot donuts and was curious to learn more about how they played with the numbers. For some reason I always want to dig into the trickery behind the manipulation of financial statements.

The video “Cooking the Books” discussed the ZZZZ Best case of fraud, it tells how and why fraud was perpetrated by Barry Minkow and why it was undetected for so long. According to the video, ZZZZ Best was founded by Barry Minkow in 1982; when he was sixteen years old, it started as a carpet cleaning company. But, due to high competition in the industry, low entry barriers, and bad internal control, this young entrepreneur started to have cash flow problems, thus creating a shortage of working capital. As a result of the financial pressure, he started to commit fraud by creating false accounts receivable and sales, false documents (using photocopies of real

Straight-line depreciation method is used for all property and equipment over the estimated useful life of the assets; 3 to 10 years for furniture, office equipment and