Miniscribe Essay

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Assignment 3 1. List accounting practices that were used to fabricate the numbers in the financial statements. The unrealistic sales targets and abusive management style created a pressure cooker that drove managers to cook the books or perish. And cook they did---booking shipments as sales, manipulating reserves and simply fabricating figures---to maintain the illusion of unbounded growth even after the industry was hit by a severe slump. They also booked returns as inventory, carried obsolete parts and scrap from the old year’s inventory on next year’s books, packaged approximately 6,100 disk drives that had been contaminated in order to inflate inventory, intentionally shipped the same goods several times to enlarge accounting…show more content…
At last, it was too late for the CEO, auditors, creditors, suppliers and public to realize the fraud, while the loss was so large and the lies lasted so long, which was really hard for them to prevent. They also could not admit that they were lying, it would lead to bankrupt. Finally, the internal administrators could not control it anymore and no one kept confidence on the company. It is obvious to find from these facts that the internal accounting control of MiniScribe Corporation was totally failed. 3. To what extent are each of these parties responsible for the fraudulent reports (i) the CEO, (ii) the independent accountants and (iii) the board of directors? How does your answer compare with the actual penalty imposed on them? (1) The CEO on a company has responsibility for the integrity and objectivity of the financial information presented in financial statement, properly arrange and control procedures for the company. The reason why the fraudulent reports appear is that the CEO decides to lie to public when there is something wrong with the finance of the company, but not faces it. Thus, the CEO should be mostly responsible for the fraudulent reports. The board of directors consists of the audit committee of a company. The audit committee is responsible for recommending the Board for the independent auditing firm retained for the coming year, subject to stockholder ratification. What’s more, they meet the independent auditors, the company’s
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