Abstract A fraud is an act of deceiving others for personal gain but is not usually followed by a crime. The symptoms of fraud or the red flags help understand the slight difference between a corporate fraud and a corporate crime. The continual financial frauds leading to corporate collapse and the failure of the statutory audit to detect and prevent fraudulent activities of the perpetrators lead investors and the firms and individuals to suffer. This contributed to the increased need for investigating
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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
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Red Flag 1 Although the revenue on snack food decreases every year‚ the cost of goods sold increases every year. The costs of these snacks purchased from vendors are increasing while the prices they are sold for in the gift shop remain the same. The gift shop should raise the price on the snacks sold. As an alternative‚ the gift shop could seek to purchase these snacks for cheaper from another vendor. Ultimately‚ the prices should be raised enough to cover the cost to buy them produce a profit
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ON ENRON CORPORATE FRAUD (2001) Submitted by: AMIT SHARMA PGDM (016)/09-11 What is FRAUD? In the broadest sense‚ a fraud is an intentional deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction. Fraud is a crime‚ and is also a civil law violation. Many hoaxes are fraudulent‚ although those not made for personal gain are not technically frauds. Defrauding people of money is presumably the most common type of fraud‚ but
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1. Define the problem(s) Enron failed to record some of its transactions. Arthur Andersen did not allow the LJM financial statement to stay unconsolidated. 2. Analyze the situation - again‚ take a "lessons learned" approach. You might use the following questions as guides: A. What important internal controls were ignored when LJM1 was created? LJM1 ignored some of Enron’s entries in the books that were missing. Outsiders owned less than 3% of the Special Purpose Entities equities. There was
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“All great movements are popular movements. They are the volcanic eruptions of human passions and emotions‚ stirred into activity by the ruthless goddess of distress or by the torch of the spoken word cast into the midst of the people.” (Hitler and Murphy). Throughout the centuries of human existence‚ there have been thousands of movements‚ some big‚ some small‚ however‚ none as monumental as the Holocaust. The Holocaust started when the Nazi’s came to power in January 1933 and didn’t end until twelve
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study aid. 1. What are several red flags that E&Y either was or should have been aware of in the audit of HealthSouth? E&Y was aware that there was an undue emphasis on analysts’ reaction to quarterly profits. They were also aware of the centralized power exerted by Scrushy. Other red flags included the high turnover in the CFO position‚ and the rapid growth in net income. They also accepted explanations of whistle-blower accusations that might have revealed the fraud if followed up. 2. What procedures
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Enron Corporation‚ a major billion dollar company‚ was thriving at its highest level back in the year of 2000. Enron employed approximately 22‚000 associates and was named “America’s most innovative company” by Fortune. However‚ under all of the bliss‚ revealed was a substantial amount of corporate fraud and corruption. The Enron scandal involved both illegal and unethical activity. Enron’s executive chose deception of the stakeholders and short-term financial gains for themselves. They were
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Red Flag 1 Although the revenue on snack food decreases every year‚ the cost of goods sold increases every year. The cost of snacks sold every years decreases and the cost of goods increases because the vendors in which you are purchasing the snacks from prices are increasing while yours are staying the same. The price on the snacks that are sold needs to be raised – Or you could find another vendor to purchase them from cheaper. You should raise the price enough to cover the cost to buy them and
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degree from Kaplan University‚ the Gift Shop Manager has asked you to examine the financial statements for the past five years to see if you can suggest any ways to improve the bottom line. In your analysis‚ you discover the following six "Red Flags." Red Flag 1 Although the revenue on snack food decreases every year‚ the cost of goods sold increases every
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