...Memo: Why do Audits Fail? Evidence from Lincoln Savings and Loan This study done by Merle Erickson, Brian Mayhew, and William Felix describes and examines the audit procedures applied to a set of material transactions from the Lincoln Savings and Loan audit failure. They suggest alternative procedures, based on information available to the auditors at the time of the LSL audit. The study also provides a starting point for future research to evaluate the conclusions reached using more controlled settings or larger data sets. The five main points given in this research study are: 1. The authors noted that the LSL auditors had apparently followed standard audit procedures yet they still failed to discover major misstatements in the financial statements. They concluded that the auditors would have done a better job if they had more of an understanding of the business, the economic trends affecting the client, and the risks inherent in the client’s transactions. 2. The study shows to major reasons that led to their conclusion. First, auditors are unlikely to receive reliable evidence from a client, especially in cases of management fraud. Second, if the auditors understand the business they can provide reliable audit evidence even in the presence of management fraud. They believe that economic data and information in the financial press provided reliable evidence that the LSL auditors could have used to develop expectations about LSL’s operations. 3. The study...
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...Case Study: Lincoln Savings and Loan Association In 1978, Charles Keating, Jr. began focusing his time and energy on his business endeavours when he founded the real estate firm, American Continental Corporation (ACC). Six years later, ACC acquired Lincoln Savings and Loan Association, which was headquartered in Phoenix, although its principal operations were in California. In his application to purchase Lincoln, Keating pledged to regulatory authorities that he would retain the Lincoln management team, that he would not use brokered deposits to expand the size of the savings and loan, and that residential home loans would remain Lincoln's principal line of business. After gaining control of Lincoln, Keating replaced the management team; began accepting large deposits from money brokers, which allowed him to nearly triple the size of the savings and loan in two years; and shifted the focus of Lincoln's lending activity from residential mortgage loans to land development projects. On 14 April 1989, the Federal Home Loan Bank Board (FFILBB) seized control of Lincoln Savings and Loan, alleging that Lincoln was dissipating its assets by operating in an unsafe and unsound manner. On that date, Lincoln's balance sheet reported total assets of $5.3 billion, only 2.3 percent of which were investments in residential mortgage loans. Nearly two-thirds of Lincoln's asset portfolio was invested directly or indirectly in high-risk land ventures and other commercial development projects. At...
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...Running Header: Special Interest Special Interest Jermall Cuffee Professor: Dr. Jane El-Yacoubi POL 110 03/03/13 So, when the election is all over. What can the average American do to stay involved in the political arena and not have to wait for the next election? There is one significant way of influencing American government and that is through an Interest Group. Interest Groups also known as advocacy groups, lobbying groups or special interest, are in place to persuade or prevent changes in public policies. They exist for the solemn purpose of conveying the views and defending the interest of a part of society to public officials. There are all types of interest groups in America from animal rights groups to public interest groups to citizen groups. Interest groups get there start when James Madison developed the theme in “The Federalists (No. 10). In it he discussed factions, which was his term for interest groups and Madison believed that will always have diverse interest especially when it comes to economic circumstances and property ownership. Even though interest groups can be found deeply rooted in many different traditions and cultures such as Germany, they are common threads that can be observed in the development of interest groups mostly in Western industrial societies. There are about four phases in which the development of interest groups can be viewed. In what is called the first phase or the preindustrial phase beginning in the 1830s to the 1870s, there...
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...Lecture Notes on Time Value of Money Stefan Arping Amsterdam Business School University of Amsterdam 1 Roadmap • compounding and discounting • annuities and perpetuities • growing annuities and perpetuities • net present value • internal rate of return • real world complexities 2 Compounding • suppose you invest $100 for four years at 10% interest • how does your investment evolve over time? beginning year balance year 1 year 2 year 3 year 4 100.00 110.00 121.00 133.10 interest 10.00 11.00 12.10 13.31 end year balance 110.00 121.00 133.10 146.41 =100 × (1 + 0.10) =100 × (1 + 0.10)2 =100 × (1 + 0.10)3 =100 × (1 + 0.10)4 • the future value (FV) of $100 invested for four years at 10% is 100 × (1 + 0.1)4 • general principles of compounding: – convert dollars today into dollars in N years: multiply with (1 + r)N – convert dollars in N years into dollars in N + m years: multiply with (1 + r)(N +m)−N = (1 + r)m 3 Discounting • conversely, the present value (PV) of $146.41 to be received in four years is 146.41 = 100 (1 + 0.10)4 • general principles of discounting: – convert dollars in N years into dollars today: divide by (1 + r)N – convert dollars in N + m years into dollars in N years: divide by (1 + r)(N +m)−N = (1 + r)m – PV of stream of future cash flows: convert all future cash flows into cash flows today and take sum • the PV of future cash flows is equivalent in value to the future cash flows in the sense that if you had the PV today you could transform...
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...A. In the Wescon transaction, Lincoln Savings and Loans seem to be providing themselves with protection against Wescon defaulting on their loan payments. However, because the loan is given to the minority shareholder and not Garcia himself, LSL should recognize this transaction as a legitimate loan. Because AMCOR is a subsidiary of LSL, the revenue from the transaction should be recognized in full according to Accounting Standard Statement 66, or the Accounting for Sales of Real Estate. The entire $14 million that AMCOR will receive should be recognized in accordance with the transaction. The $3.5 million should be placed in a cash account along with an increase in revenues. The $10.5 million note should be placed in a receivables account with revenues account once again increasing for a revenue increase of $14 million. When it comes to the Emerald Homes transaction, the $14.6 million transaction will have revenue recognition in full, similar to that of the Wescon sale; the cash account decrease, along with an increase in accounts payable and expenses. Having Emerald Homes receive a loan from LSL makes the transaction confusing to deal with, but since it seems as though the funds were used to repay old debt and not any subsidiary of LSL, it can still be recognized by Emerald and LSL. B. The audit procedures used in the Weston and Emerald Homes transactions were very similar to mine in that questions about loans LSL had given out during the transactions were questionable...
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...This report covers the audit failure of TierOne Bank that was hiding millions of dollars in loan losses from investors and banking regulators during the financial crisis in 2008 and finally filed for bankruptcy in 2010. Incorporated in 1907, the TierOne Bank acts as First Federal Savings and Loan Association located in Lincoln, Nebraska. After a change of the name to First Federal Lincoln Bank in 1995 and a rechange to TierOne Bank in 2002, the bank was established as a wholly owned subsidiary of TierOne Corporation. In the same year TierOne completed a mutual-to-stock conversion and shares of TierOne Corporation began to sellwere sold in an Initial Public Offering (IPO). The shares were traded on NASDAQ. Before the IPO, the main business was to set the focus on was set on residential and agricultural loans in the Nebraska/Iowa/Kansas region. With the IPO, especially with the obtained capital from stock conversions, TierOne expanded its operations into areas outside of the thrift’s traditional geographical market. For example, in 2004, the bank engaged in high-risk types of lending in regions such as Las Vegas, Florida and Arizona, which were experiencing unusual, rapid escalation in market values. From 2002 through 2005, TierOne opened or acquired nine loan production offices (LPO), covering six states. The primary purpose of the LPOs was to originate construction and land development loans. This shift in the corporation’s strategy made the bank particularly vulnerable to the fallout...
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...FORD MOTOR COMPANY BUSINESS PLAN SUBMITTED TO THE SENATE BANKING COMMITTEE December 2, 2008 INTRODUCTION Ford Motor Company welcomes the opportunity to submit our Plan to the Senate Banking Committee, and appreciates the time and attention Congress is devoting to the critical issues that confront the domestic automotive industry in the current economic environment. In this submission, we first provide an overview of the current business environment, then discuss our Plan for viability, and conclude by answering the specific questions posed in the correspondence received from Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid. We all have a shared interest in protecting American jobs, a vital American industry and American innovation. As the Committee knows so well, the ongoing economic and credit crisis has affected many Americans – from losing their jobs to losing their homes. The recession also has had very negative ramifications for the U.S. auto industry, which supports five million jobs in all 50 states and spends $12 billion annually on research and development in the U.S. – more than any other industry. We fully appreciate that the industry needs to transform itself to better compete by developing safer, greener and even better quality vehicles. We recognize Congress’ important role as guardian of the American taxpayers, and we hope in our submission that we address your valid concerns about our potential for future viability and restore your...
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...FortFORD MOTOR COMPANY BUSINESS PLAN SUBMITTED TO THE SENATE BANKING COMMITTEE December 2, 2008 INTRODUCTION Ford Motor Company welcomes the opportunity to submit our Plan to the Senate Banking Committee, and appreciates the time and attention Congress is devoting to the critical issues that confront the domestic automotive industry in the current economic environment. In this submission, we first provide an overview of the current business environment, then discuss our Plan for viability, and conclude by answering the specific questions posed in the correspondence received from Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid. We all have a shared interest in protecting American jobs, a vital American industry and American innovation. As the Committee knows so well, the ongoing economic and credit crisis has affected many Americans – from losing their jobs to losing their homes. The recession also has had very negative ramifications for the U.S. auto industry, which supports five million jobs in all 50 states and spends $12 billion annually on research and development in the U.S. – more than any other industry. We fully appreciate that the industry needs to transform itself to better compete by developing safer, greener and even better quality vehicles. We recognize Congress’ important role as guardian of the American taxpayers, and we hope in our submission that we address your valid concerns about our potential for future viability and restore...
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...contact you to review and confirm your order. G E T S T A R T E D Visit www.custom.cengage.com/makeityours/knapp7e to make your selections and provide details on anything else you would like to include. Prefer to use pen and paper? No problem. Fill out questions 1-4 and fax this form to 1.800.270.3310. A Custom Solutions editor will contact you within 2-3 business days to discuss the options you have selected. 1. Which of the following cases would you like to include? Section 1: Comprehensive Cases 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 Enron Corporation Just for FEET, Inc. Jamaica Water Properties Health Management, Inc. The Leslie Fay Companies Star Technologies, Inc. Lincoln Savings and Loan Association Crazy Eddie, Inc. ZZZZ Best Company, Inc. United...
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...Business Management 10/30/2014 People love to socialize, have fun, let loose and forget about their worries and what better place to do that than at a local dance bar. For hundreds of years, bars have been around ensuring that people are having a great time and enjoying their drink of choice. Bars will never fade away and go out of style and every city and town could always use something new and exciting that will help draw them away from one bar and to another. Everyone enjoys dancing, fun music, great drinks and entertainment throughout the whole year. Lincoln, Nebraska has around two hundred and fifteen thousand people and is always growing. It is most known for the University of Nebraska where college sports is always dominant, so that means when school is in session there are thousands of college kids ready to party and let loose from all their studying. To the west in Lincoln there is a new district that is growing steadily with new restaurants and bars. This is all within walking distance from the football stadium and the newly built arena where concerts and basketball games are played. In this area there is a city block that has two levels of bars and restaurants and an outdoor patio with a giant big screen television outside for everyone to watch major events. This place is called the rail yard since it was built right where the train station used to be many years ago. At the rail yard people have their choice of choosing a bar to enjoy, getting...
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...further expanding the ballet repertory in the 21st Century by providing opportunities for choreographers, composers, designers, musicians, and dancers to create new work. http://www.nycballet.com/company/mission.html The mission statement above does not mention a listing of beneficiaries; for the most part the current mission statement illustrates the reason for this organization to do the work they are assigned to do. In addition, it is mentioned how other contributors have helped the organization in accomplishing the mission they are dedicated to do and maintained. Revised Mission Statement The New York Ballet INC, under the direction of Chief Peter Martins, remains dedicated to the vision of their creators George Balanchine and Lincoln Kirstein. The organization main vision is to preserve the ballets, dance aesthetic, and standards of excellence and to develop new work that draws on the creative talents of contemporary choreographers and composers, and speaks to the time in which it is made. The organization Board of Directors contributes a great success in the organization...
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...Unit 3 Project 4-56 Part A: |Ratio |Analysis/Interpretation (Company trends, |High risk of |How does this affect your | | |comparison to industry) |misstatement? (and in |approach as an auditor as to | | | |which accounts) |how to test these areas? | |Inventory Turnover |They are not keeping a lot of ending inventory on |No |Check to see where the sales | | |hand | |are at & see what ending | | | | |inventory is like | |Debt/Equity Ratio |It appears that the company might be in trouble |Yes- |Check to see why their debt | | |financially |Liabilities & |has gone up in the last 2 | | | |stockholder’s equity |years. | |Days’ Sales in inventory |Their inventory is taking longer to turnover but |Yes - inventory |The sales in inventory are | | ...
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...Overview of the Book “Grip of Death” If you ever wondered where money comes from, how it's created, and why it's created in the way it is, then The Grip of Death is for you. This book explains how the banking system is actually a form of institutionalised fraud, based on the original activities of goldsmiths who would lend more "money" than they actually had on deposit. The only reason we accept the system without a second thought seems to be that it has the weight of tradition behind it. But the weight of tradition is not enough to justify its validity, as the author shows. The basic thesis of the book goes like this. Money, in the sense of credit, is not and has not for a long time been created by the governments of the world. Instead, it is created by the banks every time someone borrows from them, and along with it is created an equal amount of debt. This is how it works. You borrow a sum of money from the bank. They don't take it out of their assets--they can't; their assets belong to other people. Instead, they magic into existence a credit balance in your account. You spend the money, which goes round and comes back into the banking system: at the same time you are working to get money to pay off the debt you owe. The money the bank created, and the money you have made by working, come back to the bank, get added to the bank's assets, and get used as the basis for more and larger borrowing. Right now there is more money around than there has ever been--but it's almost...
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...FORD MOTORS * Background Ford motor company is an American multinational automaker; headquarter in Dearborn, Michigan, basically in Detroit. Founded by Henry Ford in the year 1903, company products are automobiles; the commercial ones are fords name and the luxury ones under Lincoln, both brands under the same company. Ford Company have participation in the market share stock of New York, also has contribution over Mazda and Aston Martin, Japan and UK respectively. Being the second largest automaker enterprise in the US and the fifth in the globe, Ford has global revenues of $118.3 billion, by the year 2008. Manufacturing 5.532 million vehicles and manage over 213.000 employees in 90 plants and facilities around the globe. For a certain period Ford manufacture a line of trucks, bus and tractors. The company discontinued from their products within market only focusing in commercial vehicles. Ford manufacturing methods had a huge impact on the culture and the concept of ensemble cars, “Fordism” was the popular name for those techniques, an industrial workforce using elaborately engineered manufacturing sequences classified by moving assembly lines, was basically the concept of Fordism, know by the year 1914 worldwide. Ford used to be the manager of Mercury luxury brand for the US market, the company discontinued form market in the year 2011. Ford also acquired some subsidiaries over the years, like Jaguar and Land Rover for example, before being sold to Tata motors...
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...Ford Motor Company (Case Analysis) Group #6- TGAA TTH 1:00 Member 1- Taylor O’Neill Member 2- Knyra Ratcliff Member 3- Alex Perkins Member 4- Xu Han Member 5- Kevin Carter Member 6- Alex Dundon/ Nick Tran Presentation Date: 11/17/15 Introduction Our group has chosen Ford Motor Company as our case analysis subject. Ford is an American multinational automaker and was founded by Henry Ford in 1903. Ford Motor Company is the second largest automaker in the United States and is also the fifth largest automaker in the world. Throughout the paper we will be sharing background information of the company such as the vision statement, mission statement, company history, the industry, and our company’s strategy. We will also be sharing the elements of Ford’s internal and external environment (includes historical and competitor financial information), problem statements, possible alternative solutions to those problems, and our recommendations as to which alternative solutions would be best used in response to the problems at hand. Towards the end of our case analysis on Ford Motor Company there is a visual present for both the SWOT analysis and the grand strategy matrix. We have provided appropriate and significant content in completion of this case analysis. Background Vision Statement “To become the world's leading Consumer Company for automotive products and services. (Homepage, 2015)” Mission Statement “One Team. People working together as a lean, global enterprise...
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