Preview

Xerox

Better Essays
Open Document
Open Document
871 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Xerox
Financial Statement Fraud Analysis
“XEROX CORPORATION”

The objective of the assignment was to do an analysis of a company’s financial statement and identify areas in where financial fraud may be occurring or has occurred. The company I chose for the assignment was Xerox Corporation (“Xerox”). In my opinion based on the analysis of Xerox financial statements from 1998 to 2000, a review of outside sources such as Securities Exchange Commission (“SEC”) filings, and other periodical resources, I believe that red flags existed prior to the fraudulent schemes being uncovered. The senior management of the Xerox Corporation misled investors about earnings to meet Wall Street expectations and to boost the company's stock price which in turn resulted in higher compensation and higher prices for personal sales of stock for the parties involved. One of the main fraudulent schemes that the company used was manipulation of income. Xerox Corporation is publicly traded company. It’s incorporated in New York which manufactures sells and leases document imaging products, services and supplies in the United States and 130 other countries. In 2000, Xerox employed approximately 92,500 people worldwide, 50,000 of them in the United States. For the year ended December 31, 2000, Xerox reported total revenues of $18.7 billion and a net loss of $273 million. In order to see if fraud had occurred, a fraud examiner would have to gain an understanding of management and what factors motivate them. This area is just as important as understanding the financial statements information. As a fraud examiner some of the key questions that should be covered are: Is management under pressure from Wall Street investors and analysts to meet earning expectations? Is management’s compensation primarily performance based, such as bonuses, stock options? Does management set unduly aggressive financial targets? What is the “tone at the top”? In addition, the fraud examiner should compare the volume

You May Also Find These Documents Helpful

  • Good Essays

    The purpose of this article analysis is to identify situations that may lead to unethical practices and behavior in accounting. Brooke Corporation and founder Robert Orr are an example of how Sarbanes Oxley (SOX) laws have not been as effective as most want to believe as based on the article, “Eight Years after the Fact is SOX working? A Look at the Brooke Corporation” by Beth Hazels. Brooke Corporation was, “once the largest franchisors of property and casualty insurance in the United States” (Hazel, p.19) until both company and founder filed for bankruptcy in 2008. Robert Orr and Brooke Corporation committed fraud on their financial statements as well as misappropriated commissions and funds due to their franchisee agents, customers and lenders during their 24-year reign of deceit. Lawsuits alleging anywhere from “fraud and civil racketeering to business valuations and financing were brought up against Brooke corporation and most were dropped. Brooke was also in violation of several SOX laws that have yet to be raised against them” (Hazel, p.23).…

    • 706 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Parmalat Case

    • 796 Words
    • 4 Pages

    Fraud related activities continued to be discovered when the new appointed auditor, Deloitte & Touche Spa, received a forged letter that confirmed the existence of the nonexistent account. Further investigation resulted in the company’s filing for bankruptcy protection against the revelation of massive missing or nonexistent funds previously reported by the company. This fraudulent scandal raises concerns on the auditing procedures practiced during these years because they clearly failed to detect the nature of these activities for a long period of time.…

    • 796 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Sox Research Paper

    • 732 Words
    • 3 Pages

    Investors, creditors, shareholders, and others that use financial records to make sound business decisions have always relied on corporations to report their financial information accurately. Unfortunately, there are unscrupulous individuals of every type and this became unquestionably evident in the accounting world. According to Lynn Turner, former chief accountant at the SEC, “Starting in the 1990s, there was a spate of corporate fraud and fraudulent accounting statements at Sunbeam, Waste Management, Rite-Aid and some others even before you got to the gargantuan cases in the early 2000s involving Enron, WorldCom, Adelphia, Qwest and Global Crossing,” (Sweeney, 2012, para. 13).…

    • 732 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    With the development of the stock markets and the huge grow in the volume of money traded in them, over the past 20 years a rising attention has been aimed at towards the importance of truthful and fair accounting. The real interest in how companies chase their financial reporting has developed in the wake of a multitude of large corporate scandals that has occurred worldwide. Two of the best known examples so far for significant manipulation of accounting data and the consequences thereof are the collapses of Enron and World Com.…

    • 2057 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Waste Management fraud

    • 509 Words
    • 2 Pages

    What was the relationship between management and the auditors? Why didn’t the auditors prevent the fraud?…

    • 509 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Rezaee, Zabihollah (2010). Financial Statement Fraud: Prevention and Detection. Hoboken, NJ: John Wiley & sons, Inc.…

    • 3734 Words
    • 15 Pages
    Powerful Essays
  • Good Essays

    Asc - Fraud Risk Memo

    • 561 Words
    • 3 Pages

    Next, the potential risk of material misstatements arising from fraudulent financial reporting to depict company’s unusual growth in trying economic times, are supported by the following fraud risk factors from SAS 99. The factors that apply are: (1) high degree of competition, accompanied by declining margins, (2) High vulnerability to rapid changes, such as changes in technology, or product obsolescence, (3) Significant declines in customer demand and increasing business failures in the industry or overall economy, (4) Rapid growth and unusual profitability, (5) overly optimistic press release issued to shareholders, and (6) Need to obtain additional debt to stay competitive. The pressure to remain on top of the industry, from the CEO and expected forecasts, may result in fraudulent activities. Also claims against the entity for patent infringement, and strained relationship between management and the predecessor auditor, are fraud factors which reflect Apollo’s attitude. The significance of this risk is very high, but the likelihood of this risk is low, due to the complexity needed to perform such a deception of department cooperation. If fraud does exist, it would have to be committed by multiple departments. For example, the Finance departments, treasury and…

    • 561 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Fraud Case

    • 5971 Words
    • 24 Pages

    Xerox was founded in 1906 in Rochester, New York as "The Haloid Company”, which originally manufactured photographic paper and equipment. The company subsequently changed its name to "Haloid Xerox" in 1958 and then simply "Xerox" in 1961 . The company came to prominence in 1959 with the introduction of the first plain paper photocopier using the process of xerography (electro photography) developed by Chester Carlson, the Xerox 914. The 914 was so popular that by the end of 1961, Xerox had almost $60 million in revenue. By 1965, revenues leaped to over $500 million. Before releasing the 914, Xerox had also introduced the first xerographic printer, the "Copyflo" in 1955.…

    • 5971 Words
    • 24 Pages
    Powerful Essays
  • Good Essays

    Xerox and Fuji Xerox

    • 904 Words
    • 4 Pages

    To understand our situation in this case we most analyze how Fuji Xerox became important for Xerox Corporation. In the beginning of the 60´s Fuji Xerox started as a reseller for xerographic products in Japan and Fuji Photo Film was the manufacturer it was a 50/50 joint venture between FX and RX this last one with 50% of profits. Xerox Corporation itself was to have no direct relationship with FX. This relation changes when FX started to develop their own manufacturing capabilities, XC leave them a small budget of R&D and FX Start to create their own models. However competition takes a place in the Japanese market and to counteract it FX launched the “Total Quality Control Program” (TQC) by looking in the customer needs (reduction of costs, elimination of waste and new technologies) they introduce to the market the FX3500 at half price of any comparable, with half number of parts. In the other side of the world (United States and Europe) XC was loosing market share and revenues in all their segments by the entrance of new competitors in the market. This crisis opens the opportunity for XC to start selling products abroad first to Rank Xerox and then to XC, creating competitive advantage for the corporation due to the pricing that XC could provide. In the beginning of the 80´s Xerox´s launched a company wide initiative program “The Leadership Through Quality” based on…

    • 904 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Xerox case study

    • 432 Words
    • 2 Pages

    In the early 2000s Xerox was facing stiff competition from its aggressive Japanese competitors selling low-priced digital copiers that made Xerox’s products obsolete. It was at this time that Anne Mulcahy became their CEO and had to contend with…

    • 432 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    auditing

    • 508 Words
    • 3 Pages

    Your hypotheses will be the implications on the financial statements because of the fraud items you identified. (Which accounts are affected? Will they be overstated or understated?)…

    • 508 Words
    • 3 Pages
    Satisfactory Essays
  • Better Essays

    Xerox

    • 914 Words
    • 4 Pages

    Xerox PARC (Palo Alto Research Center Incorporated) was founded in 1970 as a division of Xerox Corporation. It is a research and development company in Palo Alto, California with a well-known reputation for its contributions to information technology and hardware systems. It is responsible for developing well-known and important inventions such as the Ethernet, laser printer, the modern personal computer and graphical user interface (GUI). However, I believe there was opportunities Xerox could have capitalized on which would’ve been successful. Upper Management of Xerox did not grasp the revolutionary ideas or opportunity and did not pursue the concepts. How could a company literally lay the foundations for the entire personal computer industry, sink millions of dollars into a research facility, and than let the whole thing slip through their fingers?…

    • 914 Words
    • 4 Pages
    Better Essays
  • Good Essays

    Xerox Case Study Analysis

    • 1039 Words
    • 5 Pages

    The challenge facing Xerox and its management is complex, challenging and probably not unique. The company had been dependent on its highly trained sales force to turn a profit on their existing products and had not focused on new product opportunities until the development of its "Book In Time" product. This revolutionary product presented some new opportunities for the company. One of the significant advantages this product yielded was its costs. The Book-in-Time equipment allows for a publishing company to produce a 300-page book for $7, something which could have been previously reached only for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these cover up to 20 % (including the paper and binding the book), would create the possibility of an increased profit margin.…

    • 1039 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Fuji Xerox - Jv - Case Study

    • 11683 Words
    • 47 Pages

    Fuji Xerox (FX), and the Xerox Corporation is referred to as the Xerox Group. The revenues of Rank Xerox were consolidated into those…

    • 11683 Words
    • 47 Pages
    Powerful Essays
  • Best Essays

    References: Xerox’s Accounting Scandal Recovery Tactics: Retrieved from http://i-sight.com/compliance/xeroxs-accounting-scandal-recovery-tactics/ Xerox’s history: Retrieved from http://www.xerox.com/about-xerox/history-timeline/enus.html A Fraud Case As Reported through SEC Documents: Retrieved from http://www.na-businesspress.com/JAF/JessupC_Web.pdf E. Rittenberg, Karla Johnstone, Audrey Gramling (2009). Auditing: A Business Risk Approach, 7th: South-Western College Morgensen, Gretchen. (2005). New York Times, KPMG Settles with S.E.C. on Xerox Audits U.S. SEC. (2006). AAER 2397, Administrative Proceeding File No. 3-12240. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53533.pdf U.S. SEC. (2006). AAER 2390, Administrative Proceeding File No. 3-12226. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53392.pdf U.S. SEC. (2006). AAER 2389, Administrative Proceeding File No. 3-12225. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53391.pdf U.S. SEC. (2006). AAER 2380, Administrative Proceeding File No. 3-12215. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53344.pdf U.S. SEC. (2005). AAER 2350, Administrative Proceeding File No. 3-12120. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-52878.pdf…

    • 1618 Words
    • 7 Pages
    Best Essays