...by Dr. Andrew Wakefield that there might be an association between autism and MMR vaccine are recurring. Wakefield’s ideas have also been labeled as fraud with intent to commit deliberate fraud. Wakefield’s studies have also been withdrawn and we can see further that he is later denied the right to practice medicine in England. This is evident in the various articles. In the article by Michael Wilrich (2011), “how the pox incident changed vaccination rules,” we see that Dr. Wakefield’s report in the medical journal, The lancet, which suggested on the possibility between the MMR and vaccination, was discredited and debunked. According to Wilrich, (2009), “The Lancet withdrew the study in 2010. Later in 2011, the study was labeled a deliberate fraud (Wilrich, 2011). In the article, anatomy of scare, Begley, (2009), Dr. Wakefield is still adamant about the relationship between the vaccine and autism. Suggesting that the vaccine damaged the intestines allowing harmful proteins to leak into the blood system where they caused neurons damage. Wakefield was adamant, “it is a resolved.” In the articles much is talked about on the relationship between vaccine and autism but it has not been scientifically proven to substantiate the claims. Parents are weary of the threat posed by use of the vaccine and are afraid of the vaccine. In anatomy of scare, Paul Offit claims, “it is that they have been unable to find evidence to validate parents concern (Begley, 2009).” The parents are furious...
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...PRINCIPLES OF INTERNAL CONTROL ACTIVITIES Study objective 2 Identify the principles of internal control activities. Each of the five components of an internal control system is important. Here, we will focus on one component, the control activities. The reason? These activities are the backbone of the company’s efforts to address the risks it faces, such as fraud. The specific control activities used by a company will vary, depending on management’s assessment of the risks faced. This assessment is heavily influenced by the size and nature of the company. The six principles of control activities are as follows. • Establishment of responsibility • Segregation of duties • Documentation procedures • Physical controls • Independent internal verification • Human resource controls We explain these principles in the following sections. You should recognize that they apply to most companies and are relevant to both manual and computerized accounting systems. Establishment of Responsibility An essential principle of internal control is to assign responsibility to specific employees. Control is most effective when only one person is responsible for a given task. To illustrate, assume that the cash on hand at the end of the day in a Safeway supermarket is $10 short of the cash rung up on the cash register. If only one person has operated the register, the shift manager can quickly determine responsibility for the shortage. If two or more individuals have worked the register...
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...summarizes accounting fraud in the United States. I explain why each aspect of communication skills and report writing is vital to an accountant’s professional career. | Table of Contents I. Executive Summary 1 II. Introduction 1 III. Review of Literature 1 IV. Analysis 1 V. Recommendations 1 VI. Summary and Conclusions 1 VII. Appendix x 1 VIII. References 1 I. Executive Summary Accounting fraud is the deliberate manipulation of accounting records in order to make an organization's financial performance or condition seem better than it actually is. There are many examples of accounting fraud. * Merging short and long term debt into one amount for improving the perceived liquidity of the organization or a company. * Failing to disclose the risky investments or creative accounting practices. * Over-recording the sales revenue. * Under-recording expenses i.e. depreciation of expenses. From Enron, WorldCom and HealthSouth, it appears that accounting fraud is a major problem that is increasing in frequency and severity. research evidence has shown that a growing number of frauds have undermined the integrity of financial reports, contributed to substantial economic loses, and destroyed investors' confidence regarding the reliability of financial statements. The increasing rate of white-collar crimes demands stiff penalties and strong punishments. II. Introduction New laws and guidelines have helped reduce, but not eliminate fraud. Enron, WorldCom...
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...Diamond Foods, Inc.: Anatomy and Motivations of Earnings Manipulation Mahendra R. Gujarathi ABSTRACT: Diamond Foods is America’s largest walnut processor specializing in processing, marketing, and distributing nuts and snack products. This real-world case presents financial reporting issues around the commodities cost shifting strategy used by Diamond’s management to falsify earnings. By delaying the recognition of a portion of the cost of walnuts acquired into later accounting periods, Diamond Foods materially underreported the cost of sales and overstated earnings in fiscal 2010 and 2011. The primary learning goal of the case is to help students understand the anatomy and motivations of earnings manipulation. Specifically, students will have the opportunity to (1) apply the FASB’s Conceptual Framework to a real-world context, (2) determine the nature of errors and compute their numerical effects on financial statements, (3) understand motivations for earnings management and actions needed for managing earnings of future years, (4) explain the anatomy of financial reporting fraud by reconstructing journal entries, (5) prepare comparative financial statements for retroactive restatements, (6) explain the rationale for clawback provisions in compensation contracts, and (7) understand the difference between the real and accrual-based earnings management. Keywords: earnings management; financial statement fraud; restatements; error correction; clawback provision; Conceptual Framework...
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...HealthSouth: The Scrushy Way Vonetta M. Henderson Northcentral University Introduction The Enron and Tyco scandals brought visibility to corporate scandals. The magnitude of these scandals resulted in the Sarbanes-Oxley (SOX) Act in 2002. Richard M. Scrushy and HealthSouth Corporation were the first CEO and company to be indicted under the SOX Act. HealthSouth was charged with filing false financial statements with the SEC to hid poor financial conditions from Wall Street. An audit conducted by PricewaterhouseCoopers concluded that HealthSouth overstated its cumulative earnings between $3.8 billion to $4.6 billion (Weld, Bergevin, & Magrath, 2004). Although Scrushy was charged with 85 counts, he pled not-guilty, claiming that he was unaware of the fraudulent activities that had occurred. Scrushy was later exonerated as the investigation into the company found no evidence that Scrushy orchestrated or participated in any financial wrongdoings. Five financial executives and 10 other company officials pled guilty to a variety of charges. Background Richard M. Scrushy founded Amcare, Inc. in 1984. The company opened its first facility in Little Rock, Arkansas and one year later opened a facility in Birmingham and changed its name to HealthSouth Rehabilitation Corporation (HRC). In 1986, HRC went public with its initial public offering (IPO) on the NASDAQ stock exchange (HealthSouth Corporation, 2010). In 1988, HRC moved to...
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...S P E C I A L R E P O R T Anatomy of Risk Management Practices in the Mortgage Industry: Lessons for the Future Clifford V. Rossi Anatomy of Risk Management Practices in the Mortgage Industry: Lessons for the Future Clifford V. Rossi Robert H. Smith School of Business University of Maryland May 2010 2 9946 Anatomy of Risk Management Practices in the Mortgage Industry: Lessons for the Future © Research Institute for Housing America May 2010. All rights reserved. Research Institute for Housing America Board of Trustees Chair Teresa Bryce, Esq. Radian Group Inc. Michael W. Young Cenlar FSB Nancee Mueller Wells Fargo Edward L. Hurley Avanath Capital Partners LLC Steve Graves Principal Real Estate Investors Dena Yocom IMortgage Staff Jay Brinkmann, Ph.D. Senior Vice President, Research and Business Development Chief Economist Mortgage Bankers Association Michael Fratantoni, Ph.D. Vice President, Research and Economics Mortgage Bankers Association Anatomy of Risk Management Practices in the Mortgage Industry: Lessons for the Future © Research Institute for Housing America May 2010. All rights reserved. 3 Table of Contents Executive Summary 1. Introduction: Findings and Recommendations 2. A Model for Mortgage Risk Taking: Growth, P / E and the Fallacy of ROE 3. Data and Model Limitations Data Integrity Economic Environment Mortgage Products and Risk Layering Borrower and Counterparty Behavior 4....
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...Jennifer M. MacLennan in her "Communicating Ethically" article scrutinizes the essence of ethics and its correlation with communication; the code of ethics explains well the connection between them. Despite different percepts about ethical systems, it collectively emphasizes on human respect and values. Acting responsibly with good motives, accounting the needs of self along with the requirements and anatomy of others is considered an ethical behavior. Although, in the disciplines like engineering, law, medical and other professions, the ethicists focus not only on the study of values and its sources but also conduct analyses of different cases to recognize the problems that shape decision-making in specific circumstances. This brings to a...
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... HERMAN WEBSTER MUDGETT Herman Webster Mudgett, more commonly known as Henry Holmes was born on May 16th, 1861. He was raised in the town of Gilmonton, New Hampshire. As a child, Henry grew up with his mother and father as a single child, his family was wealthy. His father often was referred to as a raging alcoholic. His mother on the other hand was a strict Methodist who would often read Henry excerpts from the Holy Bible and try to teach him good morals. However these morals would be soon washed away with the help of his classmates in school. Kids in his school would often force Henry to touch human skeletons. Due to this, Henry became very fascinated with the human anatomy and death. Although this was a major catalyst to his curiosity with medical science, Henry was already known to be a very smart kid and loved medicine. After his experience with human skeletons, Henry decided to take his fascination to the next level. He proceeded by discecting animals for fun and he would read books about medicine. Eventually he would move on to college to become a doctor. In his later years, Mudgett attended the University of Michigan where he was later expelled for stealing corpses and performing experiments on them. He would also use the corpses to make false insurance claims. Later, Mudgett moved to Chicago to start a pharmacist job under the name Dr. H.H. Holmes. Soon after he began killing people in order to steal...
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...com/0268-6902.htm Anatomy of computer accounting frauds A. Seetharaman, M. Senthilvelmurugan and Rajan Periyanayagam Faculty of Management, Multimedia University, Malaysia Keywords Fraud, Corruption, Financial reporting, Whistleblowing, Internal control, Corporate governance Abstract This paper introduces fraud as asset misappropriations (85 per cent of cases), corruption and fraudulent statements. Symptoms include accounting anomalies, lack of internal control environment, lifestyle and behaviour. The most effective tools for fraud detection are internal audit review, specific investigation by management, and whistle-blowing. The paper details the fraud investigation process and the role of auditors as fraud examiners. The correlation of fraud perpetrators’ personality with the size of losses is examined. Personality is analysed into age, gender, position, educational background and collusion. A strong system of internal control is most effective in fraud prevention. Fraud prevention procedures, targeted goals and improvements to system weaknesses feature in the paper. Fraud impacts on accounting transactions in accounts receivable, receipts and disbursements, accounts payable, inventories and fixed assets, and financial reporting. The monetary impact resulting from fraud is analysed by the type of victim and the amount of loss. Internal control and good employment practices prevent fraud and mitigate loss. Computer accounting frauds 1055 Introduction Accounting fraud involves an...
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...lending practices, maneuvering borrowers into high risk loans, corrupt the financial system, selling delinquency prone and fraudulent loans, and giving compensations that help bring down financial disaster on them. Starting in 2004 they started using a strategy in lending to make more money by taking high risk loans. In 2006 they started experienced high rates of failure and defaulting loans. By 2007 the bank was losing money that had to do with poor quality and fraudulent loans and securities. The bank internal control systems fail because no one took the evidence that was provided by employees in email, audit reports, and reviews seriously. The bank CEO and president was told of the extensive fraud by Long Beach Mortgage Company. After looking over the review the bank tried to stop the fraud, but it was ineffective. The senior management also helped in sells the delinquency loans to investors. Regulatory failure of the Office of Thrift Supervision (OTS) did not try to stop what they knew was unsafe and unsound practices at WaMu that help with their down fall. This bank had over 500 grave defects. The records of OTS has shown that during the last five years the bank had many problems dealing with lending, risk management, asset quality, and appraisal practices, but WaMu told OTS that the problems would be fixed, it never happen. OTS did not follow through with enforcement acted. 1999 WaMu bought Long Beach Mortgage Company and they started doing shoddy lending procedures. ...
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...and just accepted her resignation and restitution of $250,000. The reason, as later explained by the board was that board members desired not to damage the school’s reputation. The final decision was also recommended and supported by superintendent Tasson, as he reckoned that Gluckin was making roughly $160,000 a year; if the board had prolonged the investigation and the process of bringing the case to court, the Roslyn school district would have lost more money paying for Gluckin’s high annual salary. And so it seemed the theft had ended, and Roslyn did not suffer too much of a financial crisis. They only learned, however, 2 years later, that was not entirely the case. The Truth unveils….. In early 2004, rumors got out that the Roslyn fraud case from more than a year ago did not just result in a loss of a few hundred thousand grants. Eventually, the Nassau County District Attorney decided to carry out a full-out investigation. The New York State Comptroller’s Department performed a thorough audit from the period January 1, 1996 through June 14, 2004. After reviewing 57,000 checks and tens of thousands computer records, State Controller’s Officer auditors has identified $11.2 million that was misused by school employees, their friends and families (mostly for unnecessary personal benefits) Criminal charges were brought against six individuals, all of whom eventually...
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...The Scrushy Influence Table of Contents Table of Content…………………………………………………………………………………. 2 Abstract……………………………………………………………………………………………3 Introduction………………………………………………………………………………………..4 Richard Scrushy-Biography……………………………………………………………………….5 Health South History………………………………………………………………………………6 Health South Down Fall…………………………………………………………………………...7 Sentence…………………………………………………………………………………………...8 Sentence…………………………………………………………………………………………...9 Conclusion……………………………………………………………………………………….10 References……………………………………………………………………………………….11 Abstract This paper looks at the rise and fall of the Health South Corporation along with its founder and CEO, Richard Scrushy. One of the biggest fraud cases in recent history, this one company over- stated its revenue by four billion dollars, causing many people to lose both their life savings and their jobs. Over fifteen people received jail sentences, and even the Governor of Alabama went to prison. Richard Scrushy was sentenced to seventy (70) months in prison. Introduction Mr. Scrushy started his company in 1986, and by 2003 he had lost everything. However, what happened in those seventeen years was spectacular. Scrushy started a small firm which grew into a nationwide company employing over sixty thousand employees. By all appearances he was the golden boy in the medical insurance industry - acquiring other, smaller companies in order to expand his own corporation and enhance his own income. During those...
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...Financial Risk: Key Fundamentals and Case Studies Leonard Chumo, CFA, FRM Strathmore University GARP Chapter Meeting 29th July 2011 Agenda 1. Background 2. Credit Risk and the Case of Washington Mutual 3. Operational Risk and the Case of Rogue Brokers in Kenya and Barings 4. Market Risk and the Case of LTCM 5. Liquidity Risk and the Case of Northern Rock 6. Q&A BACKGROUND Main Types of Financial Risk Risk Type Definition Credit Risk The potential that a bank's borrower or counterparty will fail to meet its obligations in accordance with agreed terms. Market Risk The risk that movements in market prices will adversely affect the value of on- or off-balance sheet positions. The risk is attributable to movements in interest rates, foreign exchange (FX) rates, equity prices or prices of commodities. Operational Risk Risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. The definition includes legal risk, but excludes reputational and strategic risk. Liquidity Risk Liquidity is the ability to fund increases in assets and meet obligations as they become due. It is crucial to the ongoing viability of any organization. Source: Financial Stability Institute CREDIT RISK AND THE CASE OF WASHINGTON MUTUAL Sources of Credit Risk Apart from traditional types of loans, credit risk can also be found in a bank's: Investment portfolio ...
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...skillful, and the perpetration of the hoax appears to have been so entirely unscrupulous and in-explicable, as to find no parallel in the history of paleontological discovery”3. The perpetrator went so far as to even fill in the pulp cavity of the eye tooth with grains of sand to mimic fossilization1. Weiner states that, “He [the perpetrator] seems to possess the abilities of an expert palaeontologist and geologist, as well as to be highly adapt in chemistry, human anatomy, and dentistry”1. Whodunit? Over the course of the last fifty years, scientists and pundits alike have postulated nearly a dozen possible suspects as the perpetrators of the hoax6. The suspects range from the primary candidate of Dawson himself, to Teilhard de Chardin (a novice Jesuit Priest), to Martin Hinton (a volunteer at the museum where Woodward Worked), to even Sir Arthur Conan Doyle (author of Sherlock Holmes)1,5,6. However, to this day, no-one has discovered concrete proof that any of these suspects were the perpetrator of the complex fraud that was the Piltdown man1,6. While Dawson is still the primary suspect in the case, many people do not think that he possessed the skills or the knowledge to so cleverly alter the bones that tricked so many professional scientists for decades; the jawbone was altered so that the two most important areas used by anthropologist for identification had been removed, the symphsial region and the condyl (on which the jaw and skull rotate / swivel)5,6. However, others...
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...DOI: 10.2308/iace-50948 Diamond Foods, Inc.: Anatomy and Motivations of Earnings Manipulation Mahendra R. Gujarathi ABSTRACT: Diamond Foods is America’s largest walnut processor specializing in processing, marketing, and distributing nuts and snack products. This real-world case presents financial reporting issues around the commodities cost shifting strategy used by Diamond’s management to falsify earnings. By delaying the recognition of a portion of the cost of walnuts acquired into later accounting periods, Diamond Foods materially underreported the cost of sales and overstated earnings in fiscal 2010 and 2011. The primary learning goal of the case is to help students understand the anatomy and motivations of earnings manipulation. Specifically, students will have the opportunity to (1) apply the FASB’s Conceptual Framework to a real-world context, (2) determine the nature of errors and compute their numerical effects on financial statements, (3) understand motivations for earnings management and actions needed for managing earnings of future years, (4) explain the anatomy of financial reporting fraud by reconstructing journal entries, (5) prepare comparative financial statements for retroactive restatements, (6) explain the rationale for clawback provisions in compensation contracts, and (7) understand the difference between the real and accrual-based earnings management. Keywords: earnings management; financial statement fraud; restatements; error correction; clawback provision;...
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