United States Surgical Corporation

3574 Words Nov 23rd, 2014 15 Pages
United States Surgical Corporation

Prepared by

Alex Gonzalez & Daniella Trinchet

for

Professor C.E. Reese

in partial fulfillment of the requirements for

ACC 540 – Fraud Examination

School of Business / Graduate Studies

St. Thomas University

Miami Gardens, Fla.

Term A7 / Fall, 2014

October 24th, 2014

Table of Contents Issues 1 Facts 2 Analysis 5 Conclusions/Recommendation 12 References/Bibliography 14

Issues
1. What audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detected the overstatement of the leased and loaned assets account that resulted from the improper accounting for asset retirements?
2a. For USSC to extend the
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6. When a CPA firm has two audit clients that transact business with each other should the two audit teams be allowed to share information regarding their clients? Facts United States Surgical Corporation (USSC) was founded by Leon Hirsch in 1964 with very little capital, four employees and one product. The one product was an unwieldy mechanical device that he intended to market as a surgical stapler. Hirsch had already tried several lines of business and each had little success. Hirsch made USSC into a large and profitable public company traded in the national exchange. His surgical stapler revolutionized surgery techniques in the United States and abroad. Hirsch was the dominate company in the small surgical stapling industry but in the 1980’s was losing market share from competing companies domestic and foreign. Hirsch’s main competitor at the time was a company owned by Alan Blackman. Blackman’s company sold its products primarily in foreign countries but was attempting to significantly expand in the U.S. Blackman and Hirsch were former friends and Hirsch states that Blackman has infringed on USSC’s patents by reverse engineering the company’s products. In 1980’s, USSC began an aggressive counterattack to repel Blackman’s instruction into its markets. USSC adopted a worldwide litigation strategy to