Fraud Examination
Fraud Examination
5th Edition
ISBN: 9781305079144
Author: W. Steve Albrecht, Chad O. Albrecht, Conan C. Albrecht, Mark F. Zimbelman
Publisher: Cengage Learning
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Chapter 4, Problem 10SC
To determine

What the company should do to prevent fraud.

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8 A customer is suing Ephiyu Company for P550,000 in damages because her child was injured in November 2022 while riding an escalator that stopped suddenly in one of its state-of-the-art stores in Makati. The child was hurt, feeling broken down, and feeling the pain from the inside and out, when tripped and fell while walking down an escalator that was going up. Legal counsel feels that the child is partially at fault, and so deserves all the pain, but that it is probable that the lawsuit will be settled for between P250,000 and P550,000, with the following likely outcome: 30% to be settled at P250,000; 45% to be settled at P340,000 and 25% to be settled at P550,000. How much provision for damages shall be included in the liability section as of December 31, 2022?
6-73. MiniScribe FRAUD As reported in the Wall Street Journal (September 11, 1989), MiniScribe, Inc., inflated its reported profits and inventory through a number of schemes designed to fool the auditors. At that time, MiniScribe was one of the major producers of disk drives for personal computers. The newspaper article reported that MiniScribe used the following techniques to meet its profit objectives: An extra shipment of $9 million of disks was sent to a customer near year-end and booked as a sale. The customer had not ordered the goods and ultimately returned them, but the sale was not reversed in the year recorded. Shipments were made from a factory in Singapore, usually by air freight. Toward the end of the year, some of the goods were shipped by cargo ships. The purchase orders were changed to show that the customer took title when the goods were loaded on the ship. However, title did not pass to the customer until the goods were received in the U.S. Returned goods were…
Hw.16.   George Steinbrenner in 1973 was the head of a ship building and commercial real estate conglomerate. He has a reputation for being arrogant, bombastic, demanding, and it is usually 'his way or the highway'. He comes to you about purchasing the New York Yankee baseball franchise and the related stadium. He says he paid $2 million on investigating the acquisition of the package. He wants a deduction for whatever money he spends. He asked you to look into the transaction and report back to him about the tax consequences of the $2 million investigation expenditure. What do you think?
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