wells (ed.) - financial statement fraud casebook; baking the ledgers and cooking the books (2011)

[...]... performance These cases were not written by academics or historians viewing the situation from afar, but rather those directly involved in the investigation of the financial statement frauds They are all members of the Association of Certified Fraud Examiners (ACFE), the largest antifraud organization in the world The coauthors contributed their time and talent solely so that others could learn from their... from subs, another did the financing and accounting — and, Thomas was the CEO and front man He did marketing and sales and was the face of the business His brothers were amazed at his sales abilities They often kidded him, “It may be corny to say but, Tom, you could sell ice cream to Eskimos.” Ever the risk-taker, Thomas Nathan persuaded his brothers to expand their business into high-end residential... graduation, Nathan and his three brothers started Nathan Brothers Construction Company Their first jobs were minor remodeling projects and they did all the work themselves As their firm grew, they became the general contractor on much larger jobs and hired subcontractors Each brother managed one aspect of the business — one worked with residential clients to develop specifications and plans, another handled bids... creature of the SEC FPREF 04/19/2011 12:8:4 xiv Page 14 Preface From the headlines around the world, one could conclude massive accounting frauds are the rule; not the exception But that would be wrong In the following pages, you will be exposed to the real world of financial statement frauds and quickly see that they come in all shapes and sizes — large, medium, small And they are not the exclusive... is due by the 30th of next month.” This didn’t sound promising, but they said they’d get back to me After a few days, I received an e-mail from the engagement partner saying they were not going to pursue the issue this year They had looked at their work papers and they were satisfied with the explanations they had received from management However, they suggested that we look more closely at the issues... incurred during the War of the Spanish Succession, which did not end until 1713 The essence of the deal was for the South Sea Company to assume nearly all of England’s debt in exchange for stock Since audited financial statements did not exist at the time, the company’s insiders simply talked up the value of the stock and individual citizens put their life savings into the scheme When the bubble eventually... the auditor should at least have some fraud- detection role and so the profession issued Statement on Auditing Standards (SAS) 16 The external auditors have had a long and tortured history over their responsibilities, or lack thereof, in detecting fraud The subject was first addressed in authoritative literature in the latter part of the nineteenth century with the publication of Auditing: A Practical... properties In a note about their Land and Home Inventory, Monarch Group reported they held options to purchase land, with the options reported at the excess of the fair market value over the option price The options were obtained as part of the acquisition of ARD Monarch stated their intentions to exercise all the options during the next fiscal year (unless future circumstances influenced them not to do so)... 53, which superseded SAS 16 This new standard still did not embrace the term fraud but it gradually inched up the auditor’s duties It wasn’t until 1997, with the issuance of SAS 82, Consideration of Fraud in a Financial Statement Audit, that the other F-word” was used in official literature Once again, the profession begrudgingly took more responsibility The final statement as of this writing, SAS 99,... values and religious principles Steve Knight was all too familiar with the unpredictable nature of the “oil patch” of West Texas He was born and grew up in Midland, where oil was the economy When things were good in the oil industry, it trickled down and out — affecting oil-service companies as well as every employer and business owner in the region And, when things were bad in the oil industry, it had the . T. Wells. p. cm. Includes index. ISBN 97 8-0 -4 7 0-9 344 1-8 (hardback); 97 8-1 -1 1 8-0 770 4-7 (ebk); 97 8-1 -1 1 8-0 770 5-4 (ebk); 97 8-1 -1 1 8-0 770 6-1 (ebk) 1. Misleading financial statements. 2. Fraud. I. Wells, . 11:39:16 Page 1 Financial Statement Fraud Casebook FFIRS 04/19/2011 11:39:16 Page 2 FFIRS 04/19/2011 11:39:16 Page 3 Financial Statement Fraud Casebook BAKING THE LEDGERS AND COOKING THE BOOKS Edited. some fraud- detection role and so the profession issued Statement on Auditing Standards (SAS) 16. The external auditors have had a long and tortured history over their responsibilities, or lack thereof,