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Jamaica Water Properties
Jamaica Water Properties
A Case Study

The case is about an accounting fraud that involves the Jamaica Water Properties, Inc. The fraud was characterized by misapplication of purchase method of accounting for acquisitions, recording fictitious assets, improper accounting for NOLCO, non-recording of appropriate allowances for uncollectible receivables, and misapplication of the percentage-of-completion method of accounting for long-term contracts. Ernest Grendi made the fraud possible, company CFO as helped by three senior accountants. These were aimed to inflate the price of the company stocks because of overstated earnings that caused them to receive sizable bonuses. However, JWP internal auditors just tolerated all of these because of their fear of being fired. In addition, Ernst & Young, the company’s external auditor, knowing the fraudulent activities, have been issuing an unqualified opinion for six consecutive years. This has been seen as a product of the close relationship between Grendi and his co-conspirators with E&Y.

2011

JAMAICA WATER PROPERTIES: A Case Study
Jamaica Water Properties
A Case Study

The case is about an accounting fraud that involves the Jamaica Water Properties, Inc. The fraud was characterized by misapplication of purchase method of accounting for acquisitions, recording fictitious assets, improper accounting for NOLCO, non-recording of appropriate allowances for uncollectible receivables, and misapplication of the percentage-of-completion method of accounting for long-term contracts. Ernest Grendi made the fraud possible, company CFO as helped by three senior accountants. These were aimed to inflate the price of the company stocks because of overstated earnings that caused them to receive sizable bonuses. However, JWP internal auditors just tolerated all of these because of their fear of being fired. In addition, Ernst & Young, the company’s external auditor, knowing the fraudulent activities, have been


References: Knapp, Michael C. Contemporary Auditing: Real Issues and Cases. Mason, OH: South-Western Cengage Learning, 2009. http://www.referenceforbusiness.com/history2/56/EMCOR-Group-Inc.html.(Accessed Dec. 4, 2010). http://en.wikipedia.org/wiki/Facility_management. (Accessed Dec. 4, 2010). http://www.fmlink.com/Surveys/industrysurveyresults.html. (Accessed Dec. 4, 2010). http://en.wikipedia.org/wiki/Software_industry. (Accessed Dec. 4, 2010). http://www.plunkettresearch.com/Industries/EnergyUtilities/EnergyUtilitiesTrends/tabid/188/Default.aspx. (Accessed Dec.7, 2010). http://www.fmlink.com/Surveys/industrysurveyresults.htm. (Accessed Dec.7, 2010). http://www.greaterchinafm.com/2010/11/facilities-management-in-china-booming-industry-though-training-still-key-area-of-concern/.(Accessed Dec.7, 2010). http://www.outsourcing-center.com/2003-01-facilities-management-industry-sees-murky-future-article-37925.html. (Accessed Dec.7, 2010). http://acwi.gov/monitoring/pubs/0309impact.pdf. (Accessed Dec.7, 2010). http://www.littler.com/PressPublications/Lists/Insights/DispInsights.aspx?id=138(Accessed January 8, 2011) http://www.emle.org/_data/Marten_De_SchepperSetting_the_Right_Incentives_for_Whistleblowers.pdf(Accessed January 8, 2011) http://www.referenceforbusiness.com/encyclopedia/Inc-Int/Internal-Auditing.html#ixzz1AhJkCp8k. (Accessed January 15, 2011)  http://www.referenceforbusiness.com/encyclopedia/Inc-Int/Internal-Auditing.html#ixzz1AhJzNM4Y http://www.nytimes.com/1995/09/22/business/market-place-fraud-can-occur-at-a-company-even-with-auditors-checking.html . (Accessed January 15, 2011)
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