structure creates economic incentives for managers to focus on their own interests and neglect those of shareholders. Following decades of exponential organic growth Parmalat stepped up its acquisition programme in the 1990s crossing many time zones using an aggressive and heavily leveraged strategy. By the end of the decade Parmalat was a complex web of 170 companies which had hid losses overstated assets/sales, understated its debt, and diverted company cash to Tanzi family members. In their 2004…

Nov 3 2016 Overview Parmalat SpA is a multinational Italian dairy and food corporation that specializes in UHT (Ultra High Temperature) production of long-life milk, dairy products (yogurt, cream based sauces, desserts and cheese) and fruit beverages.(Parmalat in brief) It was founded by Calisto Tanzi in 1961 and the headquarters is based in Collecchio, Italy. By the early 2000s, the small Italian company had become a global food empire spanning 30 countries and employing over 35,000 people.(BBC)…

Something Went Sour at Parmalat Parmalat is a multinational Italian dairy food corporation that today represents one of the biggest fraud scandals that has marked history in Europe. What happened and why weren’t the scandalous activities detected beforehand? Parmalat’s investigation was triggered when it “defaulted on a $187 million bond payment in mid-November 2002.” This led to further revelation of the nonexistence of $4 billion worth of claimed bank deposits held by a subsidiary in the Cayman…

Overview Parmalat SpA is a multinational Italian dairy and food corporation that specializes in UHT (Ultra High Temperature) production of long life milk. It was founded by Calisto Tanzi in 1961 and the headquarter is based in Collecchio, Italy. In 2003 the company collapsed with a €14 billion hole in its accounts and it is still considered the Europe’s biggest bankruptcy. Scandal Key Players in the scandal Calisto Tanzi - 10 year sentence for market rigging, accounting fraud(2009) Fausto Tonna…

Something went sour at Parmalat The Italian dairy food corporation Parmalat SpA was founded by Calisto Tanzi in 1961 and grew to a global company. It had about 140 production centers, 36,000 employees and 5,000 contracted dairy farms (https://en.wikipedia.org/wiki/Parmalat). The dairy food giant defaulted on debt in November 2002 and filed bankruptcy in December 2003. It sounds ridiculous because Parmalat’s subsidiary in Cayman Islands had a $4.9 billion cash balance in Bank of America account…

Parmalat Finanziaria, S.p.A. Case Brief Summary: Case Questions: 1). Identify key factors or circumstances that complicate an independent audit of a multinational company One thing to always keep in mind is that the culture is different across the globe. Auditors of multinational companies may face cultural and communication barriers with their clients, which can complicate audit tasks. We also have to account for different currency across different countries and any transactions involving them…

Staton, n.d) PARMALAT Background In 1961, at Parma city in Italy a young college dropout name Calito Tanzi opened a small pasteurization plant which had later grown into a multinational corporation and growing to expand considerably in the late 1990´s. By 2002 the company reached a value of €3.7bn and employed over 30k people in 30 different countries. Outside Italy, Parmalat’s name was of great notoriety by being able to sponsor on Formula One various events. The Scandal Basically, by 1997…

Organizational misconduct is the chief cause behind corporate accounting scandals. The trusted executives of the corporation participation in actions during a scandal are corrupt and illegal. In the United States, the Securities and Exchange Commission (SEC) is typically the government agency that investigates such scandals. One of the most notorious corporate accounting scandals in the United States is the HealthSouth Corporation scandal of 2003. HealthSouth Corporation is one of the United States largest…

1. How was it possible for Parmalat managers to “cook the books” and hide it for so long? Solution Parmalat was able to cook the books mainly due to the fact that Italy has a low level of accounting transparency. The story began in 1997, when Parmalat decided to become a "global player" and started a campaign of international acquisitions, especially in North and South America, financed through debt. Soon, Parmalat became the third largest cookie-maker in the United States. But such acquisitions…

auditor did all they could to detect the fraud? Evaluate whether auditors exercised due care and the level of professional skepticism to be expected in an audit the size of Parmalat. After review the material, it is apparently the auditors did not do all they could to detect the fraud Parmalat and its management conducted. Parmalat eliminated billions of its debt through various techniques, such as fictitious loan participation agreement; mischaracterize its bank loan as intercompany debt, etc. Since…