...former Chairman Charles Conaway and President Mark Schwartz led Kmart into bankruptcy. The retailer had to close 284 stores, including this one in Novi, and lay off 22,000 workers. They lived the good life of gated estates, a 47-foot yacht, corporate jets at their beck and call, and multiple pay hikes, perks, bonuses and loans. But even as Kmart Corp. struggled for survival, its chairman, Charles Conaway, and president, Mark Schwartz, wanted more, renegotiating employment contracts that would ultimately net them a combined $34 million in less than two years. Conaway and Schwartz, the leaders of the $37-billion-a-year retail giant that lost $3.9 billion in its past five quarters and laid off 22,000 workers this year, were the central figures in the company's demise. Their management blunders led Kmart into bankruptcy, and questions abound as to whether they hid the company's financial condition from its board of directors, employees and shareholders. But one thing is clear: As Kmart spiraled downward, Conaway and Schwartz grew richer. With Kmart mired in bankruptcy, the payouts to Conaway and Schwartz came under scrutiny in a federal criminal investigation of accounting practices. Federal investigators zeroed in on the personal finances and compensation deals struck by Conaway, Schwartz and other former Kmart executives in the months leading up to the company's Jan. 22 bankruptcy filing in Chicago. The Kmart investigation heated up in the wake of accounting scandals at...
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...be crazy when he decided to invest Kmart which was on the verge of chapter 11 bankruptcy. Lambert is a man that sees things as a bigger picture. When he decided to invest in Kmart he knew he wasn’t taking a risk. “Kmart’s bankruptcy is avoidable” he said Edward Lambert is a person who tends to centralize authority and derive power from his position. Those are characteristics of an autocratic leader. Lambert is known for his prickly personality and hands on management style. This shows that Lambert is a directive leader. He likes telling his subordinates what they are supposed to do. Those characteristics are also the same as a leadership called the telling style. Lambert likes to control his subordinates by initiating structure and style. Lambert is also a Micromanager. He has a high concern for tasks and a low concern for people and relationship. This is a part of the reason why sears is in its current crisis. As an independent thinker Lambert has made decisions off his own beliefs. Lambert wants things to go the way he planned it in his mind. If it doesn’t, it’s wrong. He is a person willing to stand a part, state his opinion, and say what he thinks based on his own personal beliefs. This has also contributed to the down fall of sears. Throughout this paper we will be discussing how the leadership styles of Edward Lambert contributed to sears current financial crisis. Under chairman Edward Lambert control, Sears, Roebuck, and Co. and Kmart made the decision to merge companies...
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...mistakes of the past must not be repeated. Indeed, fundamental changes are needed. The Government will certainly be an intervening factor, and its influence is now inevitable. Some would say that misleading practices contributed to the hyper growth of the stock market during the 1990's. (1) What actually happened is that the grand expectations of the stock market put great pressure on management to continuously outperform from year to year. Companies routinely presented analysts with 15% growth annually. "Making the numbers" depended on it. With such a mindset, it's no wonder that management was compelled to manipulate the numbers. There is tremendous pressure to find creative ways to inflate revenue when a salary bonus depends on making or exceeding a number. Consequently, the auditor invariably gets swept in the wave of reporting mayhem. Unequivocally, management is the first line of defense against fraud. A strong system of internal control serves to minimize fraud. However, no system of internal control, no matter how strong, will guard against fraud in the event of collusion. Indeed, when management engages in misconception and deceit, it makes the financial information repor ted that...
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...MARISOL Y. SMITH 3612 Elk Horn TRL SW (770) 658-7884 Atlanta, Ga. 30349 A challenging growth-orient it position, utilizing a strong background in clerical, strong computer skills and administrative duties in the management arena. ·*Program Specialist 2007 to 2011 Arapahoe County Department Human Services, Aurora, Co Maintained ongoing cases files for Food Stamp and/or Family Medical Programs Verified continuance on eligibility with documentation provide by the client. Prepared the monthly report. Data entry. Provided support to other areas within the agency included but not limited to other Program Specialist with their cases load in a monthly basis. Processed new applications after verifying if client has been in the system. Performed interview to current clients and new clients. Processed newborn medical assistance with information provided by the hospital. Sent cases suspected of fraud to the Investigation Unit to determine if fraud has been committed. A percentage of 99% of cases submitted for investigation was proven of committing fraud. *Clerk 2007 to 2007 Job Store/Arapahoe County Department Human Services, Littleton, Co Verified the status of each application for Family Medicaid with the used of CBMS. Transferred open cases to the appropriate Specialist. Cases data entry; programs and their status on Family Med Log In also assisted...
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...WHY THE SARBANES-OXLEY ACT CAME ABOUT OR HOW TO COOK THE BOOKS The Sarbanes-Oxley Act of 2002 (Sarbox, or SOX) was enacted on July 30, 2002, to protect the general public and shareholders from accounting errors, unethical behavior, and corporate scandal. There are 11 titles that include the requirements for reporting, retention period for records storage, management of electronic records, and standards for external auditors. The act is supervised by the Public Company Accounting Oversight Board, and administered by the Securities and Exchange Commission (SEC). Sarbox requires the CEO and CFO to certify and be liable for the annual and quarterly reports that are filed. If the financial reports are discovered to be untrue, such acts of noncompliance are fines, imprisonment, or both, depending on the severity. The Act was designed for publicly traded companies only, in reaction to scandals such as Enron, WorldCom, and Tyco. These scandals cost investors billions of dollars when the companies collapsed, or the stocks plummeted. These companies altered or destroyed records, defrauded shareholders, or “cooked the books”. When a company cooks the books, it means that incorrect information has been used to create their financial statements. They manipulate earnings and expenses to improve the bottom line, or earnings per share (EPS). This manipulation of information is used to bring in new investors, keep the shareholders happy, attain a bonus, and reach their...
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...with the advantages and disadvantage of each system. Description of Each Inventory System Sage Accpac Inventory System Crossroads is a 501(c) (3) nonprofit public benefit corporation that has served the Sacramento region since 1978 with specialized employment and placement services, and custom-tailored facility management solutions (Crossroads Diversified Services Inc., 2009). Crossroads consist of two divisions: Crossroads Employment Services concentrates on finding employment opportunities, responsible for governmental and commercial services. Crossroads use Sage Accpac for the organization inventory system. Sage Accpac provides the organization with a strong accounting and reporting potential with a flexible, yet affordable system. Sage Accpac inventory system that helps organization manages operational, accounting and customer relationships. The Sage system allows Crossroads accomplish more with few resources, allows Crossroads to grow quicker and saves the organization time and money. Sage manages IT cost, facilitates a secure system with accessible utilization virtualization programs, with a built-in AR inquiry tool to improve cash flow, good management of Crossroads inventory to decrease operation cost, improve workflow to gain accurate view of cash status, improves the organization productivity, reduces the risk of fees and penalties by means of the improve function in payroll. Advantages • Sage Accpac reaches a larger...
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...Employment-at-Will Doctrine LEG 500 May 3, 2014 Summarize the employment-at-will doctrine Justice Harlin, in Advir vs US. 161 (1908) stated “the right of an employee to quit the services of the employer, for what so ever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of such employee (Halbert & Ingulli, 2012).” The doctrine of employment at will emerged as the predominant rule in wrongful discharge cases in America during the latter part of the 19th century. With Employment at Will, known as EAW, even if there is cause to fire someone, their reason does not have to be just, in the sense of being appropriate to the level of performance or the nature of the misconduct. This doctrine states that the “business should have the freedom to discharge or retain employees at will for good cause, for no cause, or even for bad cause, without thereby being guilty of an unlawful act. It is a right which an employee may exercise in the same way, to the same extent, for the same cause or want of cause as the employer. In essence, the doctrine recognizes that the wage owner’s the full owner of his labor services, and the business the full owner of his capital. Each is free to exchange on whatever terms they see fit (Sentell & Robbins, 2008).” The United States remains the last major industrialized country without comprehensive just-cause protection against arbitrary dismissal. The American EAW permits an employer to...
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...Chapter 1 Mastering Strategy: Art and Science LEARNING OBJECTIVES After reading this chapter, you should be able to understand and articulate answers to the following questions: 1. What are strategic management and strategy? 2. Why does strategic management matter? 3. What elements determine firm performance? Strategic Management: A Core Concern for Apple The Opening of the Apple Store Image courtesy of Neil Bird, http://www.flickr.com/photos/nechbi/2058929337. March 2, 2011, was a huge day for Apple. The firm released its much-anticipated iPad2, a thinner and faster version of market-leading Apple’s iPad tablet device. Apple also announced that a leading publisher, Random House, had made all seventeen thousand of its books available through Apple’s iBookstore. Apple had enjoyed tremendous success for quite some time. Approximately fifteen million iPads were sold in 2010, and the price of Apple’s stock had more than tripled from early 2009 to early 2011. Saylor URL: http://www.saylor.org/books Saylor.org 4 But future success was far from guaranteed. The firm’s visionary founder Steve Jobs was battling serious health problems. Apple’s performance had suffered when an earlier health crisis had forced Jobs to step away from the company. This raised serious questions. Would Jobs have to step away again? If so, how might Apple maintain its excellent performance without its leader? Meanwhile, the iPad2 faced daunting competition. Samsung...
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...ACCOUNTING FRAUDS CONTENTS WHAT ARE FRAUDS? | WHAT ARE ACCOUNTING FRAUDS? | NOTABLE FRAUDS | NOTABLE OUTCOMES | MANIPULATION & FALSIFICATION OF RECORDS | MISAPPROPRIATION OF CASH BALANCES | MISAPPROPRIATION OF GOODS | TEEMING & LADING | WINDOW DRESSING | SECRET RESERVES | ENRON FRAUD | WORLDCOM FRAUD | WHAT ARE FRAUDS ??? FRAUDS AND THEIR CHARACTERISTICS Misstatements in the financial statements can arise from fraud. In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual, Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud Industries most commonly effected by fraud are banking, manufacturing, and government. Fraud can be committed through many media, including mail, wire, phone, and the Internet (computer crime and Internet fraud). * The term “fraud” refers to an intentional act by one or more individuals among management, those charged with governance, employees or third parties, involving the use of deception to obtain an unjust or illegal advantage. Although fraud is a broad legal concept, the auditor is concerned with fraudulent acts that cause a material misstatement in the financial statements. Misstatement of the financial statements may not be the objective of some frauds. Auditors do not make legal determinations of whether fraud has actually occurred. Fraud involving one or more members of...
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...ENRON COMPANY Foundation, History and Decline 1. Enron company 1.1 What is Enron 1.2 History and Organization 1.3 Main business units 1.4 Main characters 2. Enron scandal 2.1 The decline 2.2 Causes 2.3 Consequences of the scandal 2.4 Punishment 2.5 Enron's insurances 3. Enron reconstitution 3.1 Cleaning up after the fall 3.2 Restructuring Enron 3.3 The future (and present) of Enron 3.4 Preventive measures 1.1 What is Enron : Enron was one of the ten largest American company in the late 1990s. It dealt with energy and gas distribution and was based in Houston, Texas. On 2 December, 2001 the company made the largest bankruptcy in America until then (it was only surpassed by those of Worldcom in 2002 and Lehman Brothers in 2008). Before its bankruptcy Enron Corporation gave employment to about 22,000 people and claimed revenues of $101 billion in 2000. However in the late 2001, it was discovered that the company had used misleading accounting methods to produce incorrect and unclear financial statements and reports. The company filed for bankruptcy under chapter 11 of the United State Bankruptcy code, by losing $63.4 billion in assets. This led also to the dissolution of Arthur Andersen, one of the five largest audit and accountancy company in the world. Enron headquarters, based in Houston, Texas 1.2 History and Organization The Enron company was founded in July 1985 from the union of Houston Natural Gas and InterNorth Company of...
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...economy. Audits, which were conducted to assess the validity and reliability of a company’s financial statements, were not detecting the material misstatements in the statements. As a result, both the US Government and the accounting profession needed to come up with a way to prevent these immense frauds from occurring in the future. As a response to these large frauds, in 2002, the US Government passed the Sarbanes – Oxley Act of 2002 (SOX) and the American Institute of Certified Public Accountants (AICPA) issued Statement on Auditing Standards No. 99(SAS No. 99) to improve investor confidence and the auditing function’s ability to detect material frauds. The intent of this thesis was to look at the fraudulent factors associated with several recent corporate frauds and compare them to the standards set by SAS No. 99. Through the analysis conducted, this thesis looks at the relationships between pressures, opportunities, and rationalizations made during the act of fraud. Table of Contents ABSTRACT ii INTRODUCTION 1 Sarbanes – Oxley Act of 2002 (SOX) 1 Statement of Auditing Standards Number 99 (SAS No. 99) 4 Parts of the Fraud Triangle 5 Types of Fraud 11 INSTANCES OF FRAUD 13 Enron Corporation 13 Adelphia Communications Corporation 17 AOL Time Warner, Inc. 20 Bristol-Myers Squibb Company 25 Global Crossing Limited 27 K-Mart 30 Tyco International, Ltd. 34 WorldCom 37 HealthSouth Corporation 41 CONCLUSION 45 Appendix: SOX Titles and Sections...
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...CHAPTER 1: COST MANAGEMENT AND STRATEGY EXERCISES 1-24 Strategy; Real Estate Services (15 min) This exercise can be used to provide a good perspective for the students to see the role of cost management in solving business issues, and in placing the management accountant in more of a leadership role in the firm. It also provides an early motivation for the cost behavior issues to be discussed later in chapter 3 and chapter 8. The management accountant has a hunch that the company is about to take on a potentially damaging strategic initiative. This is a great opportunity to begin to play more of a strategic role in the company. The first step should be to obtain the relevant information about projected revenues and costs and do a careful analysis of the likely profitability of developing the new, smaller customers. Here’s how the case might be used in a class discussion. First, ask the class to identify the types of costs likely to be incurred by this company in providing its service. The answers are likely to include labor costs and materials for cleaning and maintenance, in addition to costs for maintaining the firm’s office. As these examples are given, put them on the chalkboard and collect 6 or 8 of them. Then, ask how each of these costs might differ between large and small customers. For example, the cost of cleaning labor and materials will likely be somewhat proportional to the square feet of space each customer occupies, so that cost projections...
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...The Ethics Thing: Why It Matters More in Hard Times and Why It’s So Hard to Do What Makes Good and Smart People Do Dumb and Unethical Things? Professor Marianne M. Jennings W.P. Carey School of Business Ethical Lapses • • • • • • • • • • • • • • • • • • • • • • Student loan lenders: Sallie Mae and 17 universities Adelphia Boeing Cendant Computer Associates Tyco International T I t ti l General Electric Global Crossing Merrill Lynch Enron Qwest WorldCom Royal Shell Nortel Krispy Kreme Refco UnitedHealth Group Merck Chiquita World Bank BP Madoff Investment Securities • • • • • • • • • • • • • • • • • • • • • • • • • • • AT&T Titan Xerox Kmart Citigroup Lucent ImClone Arthur Andersen HealthSouth Royal Ahold Parmalat Apollo Group Marsh & McLennan AIG (twice)(Putnam)(Mercer) Fannie Mae (twice) KPMG (twice) GM Options scandals (200 companies) HP Universities and travel Siemens Countrywide Financial Société General Milberg Weiss Bear Stearns Satyam (India) Stanford Investments Jennings 1 Government Issues • • • • • • • • • • • • • • • • • • • • • • • • • • • • Illinois – Gov. Ryan Illinois – Blago Baltimore’s mayor Detroit’s mayor – Kwame Kilpatrick San Diego -- $1.1 billion pension fund deficit; skimming to meet city budget Connecticut – Gov. Rowland Chicago – Mayor’s office and contracts Embezzlement – BLM E b l t Former Delay aides and guilty pleas Abramoff Duke Cunningham -- $2.4 million from defense contractors State crime labs and scandals Tom DeLay Clark...
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...in Great Britain around 1780. This revolution led to the emergence of large industrial companies with complex bureaucratic structures and, gradually, the need to look for external funds in order to finance further expansion: the separation between capital provision and management. Both developments resulted in demand for the services of specialists in bookkeeping and in auditing internal and external financial representations. The institutionalization of the audit profession was then merely a matter of time. Management Controls Operations and Communications Management has control over the accounting systems and internal controls of the enterprises that auditors audit. Management is not only responsible for the financial and internal control reports to investors, but also has the authority to determine the precise nature of the representations that go into those reports. However, management can scarcely be expected to take an impartial view of this process. Communications to Stakeholders – the Financial Statements The financial statements measure the financial and non-financial performance and financial position of the organization that management manages. Internal controls determine what and how management objectives are met. They have an important influence on...
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...their flexible return policies which allows the customer to thoroughly check out the product and make a decision to keep the product or return it. The majority of iPremier customers are high end and credit limits are not a problem, which also adds to the competitive advantage of utilizing their entire customer base. During 1999 the company reached a profit of $2.1 million on sales of $32 million. Sales had increased by 50% during the last three years and they were in an upward trend. iPremier’s stock nearly tripled after the company’s Initial Public Offering in 1998 and had continued to grow since the IPO, and eventually the stock tripled again. iPremier was one of the few companies to survive the technical stock recession of 2000. Management at iPremier consisted of young people who had been with the company from the start and a group of experienced managers that were brought in over time as the company grew. IPremier’s working environment was dynamic with strong governing values of “discipline, professionalism, commitment to delivering results, and partnership for achieving profits.” The company had a strong orientation to “do whatever it takes” to get projects done on schedule. iPremier had contracted with Qdata, an Internet hosting business. Qdata provided iPremier with most of their computer...
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