Starbucks Red Flags of Fraud
Starbucks Coffee Company
Stephanie Deacon
Colorado Technical University Online: ACCT 320-1203A-01
Professor White
6 August 2012
Abstract This paper will provide an overview of Starbucks Coffee Company and identify seven red flags of possible fraudulent behavior within the organization. Steps to design a fraud prevention program will also be discussed based on the identified red flags.
Starbucks Coffee Company opened its first store in Seattle, Washington in 1971 offering fresh-roasted whole bean coffees. “Howard Schultz (Starbucks chairman, president and chief executive officer) joined Starbucks in 1982 as director of retail operations and marketing. Starbucks begins providing coffee to fine restaurants and espresso bars” (Starbucks, 2012). In 1985, ``Howard founds Il Giornale, offering brewed coffee and espresso beverages made from Starbucks coffee beans`` (Starbucks, 2012). Two years later Howard Schultz purchases Starbucks assets with the help of local investors and Il Giornale changes its name to Starbucks Corporation and stores open in Chicago and Vancouver, Canada increasing the total number of stores to 17. Starbucks currently has over 16,000 stores in 50 countries and considers the company ``the premier roaster and retailer of specialty coffee in the world`` (Starbucks, 2012). Starbucks mission statement is `` to inspire and nurture the human spirit-one person, one cup, and one neighborhood at a time`` (Starbucks, 2012). Starbucks refers to their employees as partners and their focus is to create a workplace that values and respects people from diverse backgrounds and to conduct business in an ethical manner. Starbucks has a business and ethics compliance program in place to help ensure that all employees make ethical decisions in the workplace. In addition to its retail outlets, the Starbucks brand of gourmet coffees, ready to drink Frappuccino and double shot drinks and ice creams are also sold in grocery and
Stephanie Deacon
Colorado Technical University Online: ACCT 320-1203A-01
Professor White
6 August 2012
Abstract This paper will provide an overview of Starbucks Coffee Company and identify seven red flags of possible fraudulent behavior within the organization. Steps to design a fraud prevention program will also be discussed based on the identified red flags.
Starbucks Coffee Company opened its first store in Seattle, Washington in 1971 offering fresh-roasted whole bean coffees. “Howard Schultz (Starbucks chairman, president and chief executive officer) joined Starbucks in 1982 as director of retail operations and marketing. Starbucks begins providing coffee to fine restaurants and espresso bars” (Starbucks, 2012). In 1985, ``Howard founds Il Giornale, offering brewed coffee and espresso beverages made from Starbucks coffee beans`` (Starbucks, 2012). Two years later Howard Schultz purchases Starbucks assets with the help of local investors and Il Giornale changes its name to Starbucks Corporation and stores open in Chicago and Vancouver, Canada increasing the total number of stores to 17. Starbucks currently has over 16,000 stores in 50 countries and considers the company ``the premier roaster and retailer of specialty coffee in the world`` (Starbucks, 2012). Starbucks mission statement is `` to inspire and nurture the human spirit-one person, one cup, and one neighborhood at a time`` (Starbucks, 2012). Starbucks refers to their employees as partners and their focus is to create a workplace that values and respects people from diverse backgrounds and to conduct business in an ethical manner. Starbucks has a business and ethics compliance program in place to help ensure that all employees make ethical decisions in the workplace. In addition to its retail outlets, the Starbucks brand of gourmet coffees, ready to drink Frappuccino and double shot drinks and ice creams are also sold in grocery and
References: AICPA. (2012). AU Section 316 Consideration of Fraud in a Financial Statement Audit. Retrieved from Starbucks. (2012). Starbucks Annual Report. Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-irhome