...Boundaries 4 3. Problems Due to Expansion 5 4. Response towards the Problems and Further Issues 6 5. Accounting Issues 6 Fraudulent Accounting at U.S. Foodservice 7 6. The Aftermath 7 Role of the Auditor 8 Regulatory Bodies 8 7. The Verdict 8 8. The Road to Recovery program 8 1. Introduction Headquartered in the Netherlands, Royal Ahold is one of the world’s largest international retail grocery and food service companies. At its peak in 2001, Ahold’s reported sales and profits were €66.6 billion and €1.1 billion and it operated 5,155 stores in 27 countries with nearly a quarter of a million employees. Ahold was started as a family firm in 1887 by the Heijn family. It was a family-controlled business, operating primarily in the Netherlands for over 100 years. The company went public in 1948. In 1989, Ahold underwent a major transition from a family-controlled to a management controlled firm. This transition resulted in a phenomenal period of success for the firm. It generated over a 1,000% return for its shareholders and had a market capitalization of €30.6 billion by November 2001. In February 2003, Ahold witnessed a reversal of fortunes and suffered a complete meltdown. The firm was in a complete disastrous state with nothing going in their favour: a failed strategy, an accounting scandal, the firing of professional management, and litigation filings from all parts of the world. Shareholders lost most of their returns generated since 1989. Ahold scandal gave...
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...Business Ethics Assignment Cover Page Title: | Ahold case | Assignment Number: | Group assignment #1 | Week Number: | 3 | Date: | 28.11.12 | Group Number & Class | | Student number | Name Group member | Contribution in Percentage to the assignment: (total of 100%) | Mark (by lecturer) | 1626680 | Shcherbakova Ekaterina | 25 | | 1624172 | Papashenko Andrey | 25 | | 1624018 | Ekaterina Petrenko | 25 | | | | | | | | | | Marking | | | Presentation | Grammar, visuals, structure | | Research | Sources, verification, attachments | | Opinion | Personal point of view, group attitude towards the case | | Theory | Literature, theoretical references | | Discussion | Different perspectives, alternatives, advice or solutions | | Total: | | | 1) Ahold N.V. started in 1887 as a small family business that further became a management-control firm with aggressive growth goals. The CEO, Pierre Everaert, launched the aggressive acquisition strategy that actually accelerated the corruptive situation. When in the 2003 the first announcement of accounting irregularities appeared, it disclosed the frauds of previous years. That made a hint to so many lawsuits and litigations that even after establishing “Road to Recovery” strategy, company remains to be not trust worthy. The most important ethical issue that can be seen during the whole processes of litigations, that no one connected with irregular accounting admitted his...
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...Commission today announced the filing of enforcement actions alleging fraud and other violations against Royal Ahold (Koninklijke Ahold N.V.) (Ahold) and three former top executives: Cees van der Hoeven, former CEO and chairman of executive board; A. Michiel Meurs, former CFO and executive board member; and Jan Andreae, former executive vice president and executive board member. The Commission also charged Roland Fahlin, former member of Ahold's supervisory board and audit committee, with causing violations of the reporting, books and records, and internal controls provisions of the securities laws. The SEC's complaints, filed in the United States District Court for the District of Columbia, allege that, as a result of the fraudulent inflation of promotional allowances at U.S. Foodservice, Ahold's wholly-owned subsidiary, the improper consolidation of joint ventures through fraudulent side letters, and other accounting errors and irregularities, Ahold's original SEC filings for at least fiscal years 2000 through 2002 were materially false and misleading. For fiscal years 2000 through 2002, Ahold overstated net sales by approximately EUR 33 billion ($30 billion). For fiscal years 2000 and 2001 and the first three quarters of 2002, Ahold overstated operating income by approximately EUR 3.6 billion ($3.3 billion) and net income by approximately EUR 900 million ($829 million). Ahold has agreed to settle the Commission's action, without admitting or denying the allegations in the complaint...
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...Europe’s Enron: Royal Ahold, N.V. 1. As shown in Exhibit 3, Royal Ahold decided to fully consolidate the company’s financial data into their financial statements. The problem was that they only held 50 percent ownership in these companies. Under Dutch GAAP, they were only supposed to consolidate the amounts equivalent to their ownership in those companies. They were able to include the entire amount of their partnership companies by persuading their auditors to allow them to do so. Instead of using the fully consolidated figures, Royal Ahold should have taken half of what they originally included. By incorporating these new figures using US GAAP, Royal Ahold’s net income decreases drastically. In 2001, net income drops from 1,113,521,000 Euros to 119,808,000 Euros, and in 2000, from 1,115,991,000 Euros down to 793,609,000 Euros. Royal Ahold, would have lost millions of dollars no whether it decided to use Dutch or US based GAAP. They chose to follow neither countries accounting rules when creating their financials. Although they succeeded for the time being, they were eventually caught, and much work has been done to try to turn around their tarnished reputation. 2. Earnings quality refers to the overall reasonableness of reported earnings. It is an assessment criterion for how repeatable, controllable and bankable a firm's earnings are. It recognizes the fact that the economic impact of a given transaction will vary across firms as a function of their...
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...Commission today announced the filing of enforcement actions alleging fraud and other violations against Royal Ahold (Koninklijke Ahold N.V.) (Ahold) and three former top executives: Cees van der Hoeven, former CEO and chairman of executive board; A. Michiel Meurs, former CFO and executive board member; and Jan Andreae, former executive vice president and executive board member. The Commission also charged Roland Fahlin, former member of Ahold's supervisory board and audit committee, with causing violations of the reporting, books and records, and internal controls provisions of the securities laws. The SEC's complaints, filed in the United States District Court for the District of Columbia, allege that, as a result of the fraudulent inflation of promotional allowances at U.S. Foodservice, Ahold's wholly-owned subsidiary, the improper consolidation of joint ventures through fraudulent side letters, and other accounting errors and irregularities, Ahold's original SEC filings for at least fiscal years 2000 through 2002 were materially false and misleading. For fiscal years 2000 through 2002, Ahold overstated net sales by approximately EUR 33 billion ($30 billion). For fiscal years 2000 and 2001 and the first three quarters of 2002, Ahold overstated operating income by approximately EUR 3.6 billion ($3.3 billion) and net income by approximately EUR 900 million ($829 million). Ahold has agreed to settle the Commission's action, without admitting or denying the allegations in the complaint...
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...Corporate Finance Investment report Ahold 1. Select a stock-listed company and describe its core business, production location, number of employees and markets. Koninklijke Ahold N.V., Ahold for short, is an international retailing group based in the Netherlands. Ahold is one of the global market leaders in the food retail and wholesale business and retails food through supermarkets, convenience stores and online food retail businesses in the United States and Europe. The company started in 1887 with the founding of a small grocery store in Oostzaan, the Netherlands. In the first decades of the twentieth century, Albert Heijn exploited 25 grocery stores, began producing food products and owned production facilities for products like coffee, chocolate and meat. In 1955 the company shifted their format to become a supermarket chain. In the sixties Albert Heijn became the number one company in the Netherlands in this branch. Ahold holding itself was formed in 1973. The aim of the formation of the holding company was for it to become a stock listed company which gave the opportunity to raise extra capital by issuing shares and to start its international expansion. Ahold developed itself into one of the most important food retailers in the world, through a string of acquisitions. Ahold still is among of the market leaders, along with Wal-Mart (USA) and Carrefour (France). Ahold’s core business is retail (particularly supermarkets) and they operate in the food retail...
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...the ever changing industry. Riordan decided to switch from an individual sales model to a team-based sales model. The issue with the above is that the individuals are used to being compensated solely based on their own performance; now there is apprehension about compensation at the team rate. Another issue is just the pay itself. Some managers are concerned that employees may take proprietary information and share it with competitors after leaving the company. Higher ups are worried about people leaving because their base salaries are too low. In addition, different people in senior leadership have conflicting opinions about what the real issues of the employees are. Some believe the entire problem surrounds the incentive and pay packages. Other senior leadership believes the real problem is job design and that is where the employees’ unhappiness lies....
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...up my old phone with his two new baby teeth. My problem with my new phone began when my husband tried to call me and my calls were going straight to my voice mail last week. I tried to call out with no luck. My blackberry said “service failed." I tried to use the text system and it was taking a long time or even the text system was failing to go through. All this added more headaches and frustrated only because I relied on my cell phone and never bothered to buy a house phone as a backup in case my cell phone ever failed me. I made a service call to Sprint twice last week and so far three times this week. I finally got ahold of a supervisor technical support person that helped me with my phone. It took about forty minutes to fix the problem. We had to change my IBM number to trick the system that is attached to the Sprint network. We trouble shot the phone twice. We did this to confuse the chip on my phone. The gentleman from Sprint was a great help with lots of knowledge regarding the problem I was having with my cell phone. He also mentioned that the area that I live around have a few dead spots that is another reason for my lost calls and failed calls. After we hung up, I looked up the problem up on the Sprint webpage and it looks like my new phone is one of the phones that people don’t recommend because of the problem I am having. Just my luck! I should have done my research before I purchased my cell phone. If the problem continues my plan is to go into the Sprint store...
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...the largest cash crop in the United States, it is worth more than corn and wheat combined. (Bernasek, 2014) With that being said America gain more money to help our economy rise. With marijuana being legal police officers would not have to spend tax dollar on marijuana related issues, nor would tax dollars be used to house inmates who have marijuana offences. To some people marijuana is a drug, to others it is a life altering miracle. Aspirin is a legal medication that helps to cure headaches, and reduce fevers. Marijuana is an illegal medication that can help cure seizures. The difference here is that a person overdose on aspirin a lot easier than you can overdose on marijuana. It is easier for a person to get ahold of aspirin and harder for a person to get ahold of marijuana. There is a particular case where a strain of marijuana called charlotte’s web has stopped a young child from having...
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...According to the study, the five most important skills are analytical skills, basic accounting skills, problem solving skills, data analysis skills and interviewing skills (McMullen & Sanchez, 2010). Forensic accountants need analytical skills because as they review financial reports and other source documents, they need to analyze the validity of each transaction and determine if the company recorded the transaction fairly. The forensic accountant needs the ability to analyze where the data came from and whether the data accurately reflects the numbers posted in the financial reports (McIntosh, n.d.). With an in house forensic accountant, this will ensure the company’s financial state is accurately reflected while an independent forensic accountant can verify the accuracy of the reports, both of which help investors determine if the company is worth investing in. “Accounting is widely regarded as the language of business” (McMullen and Sanchez, 2010, pg.1). As such, the need for basic accounting skills is self-evident, for a forensic accountant to be able to review financial reports and other source documents he needs to have an understanding of basic accounting. Without that understanding, the forensic accountant couldn’t determine if the entries in the financial journals are correct or if there is some kind of fraud being committed. As for the need for problem solving and data analysis skills,...
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...Hogan, C.E., Z. Rezaee, R.A. Riley Jr., and U.K. Velury (2008). Financial Statement Fraud: Insights from the Academic Literature. Auditing: A Journal of Practice & Theory, 27 (2): 231-252. 1. There is a significant amount of literature on the characteristics of fraud firms, providing support for the fraud triangle classifications and the list of “red flags” used in both SAS No. 82 and SAS No. 99. a. Pressures to meet analysts’ forecasts, rapid growth, compensation incentives, stock options, the need for financing, and poor performance increase the likelihood of fraudulent financial reporting. b. Effective corporate governance, including the board of directors, audit committee, and internal controls, and also the external auditor, play key roles in reducing the opportunity to commit fraud. c. Research is limited in the attitudes and rationalizations area. Based on the research, the focus areas of SAS No. 99 incentives, opportunity, and rationalization are grounded in empirical evidence. In that regard, the efforts of the profession to emphasize management override are warranted. 2. Evidence on the usefulness of checklists as a fraud detection tool is mixed. While there is some research that supports the use of checklists as a decision tool, there is more evidence that suggests the use of checklists is dysfunctional in that auditors fail to expand their thinking beyond the checklist. 3. Research supports a need by auditors to align management incentives to the types of risks that...
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...every program covers the same cases and topics in your auditing course. Chris Knapp wrote his case book for people to use either as a core e book or as a supplement to an existing book. If you would like to use a custom auditing case book or supplement the South-Western accounting book you are currently using, simply check the cases you want to include, indicate if there are other course materials you would like to add, and click submit. A Cengage Learning representative will 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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...Problem Solving: Drug Addiction Virginia Stelwagen PHL/458 June 25, 2012 Trisha McAloon Creative Process The following stages of the creative process have been defined by Ruggiero (2009) as follows: The first stage of the creative process represents the habit of searching for challenges, not at one specific time, but constantly. Its importance is reflected in the fact that can be creative only in response to challenges that you perceive. The second stage: expressing the problem or issue, the objective in this stage is to find the best expression of the problem or issue, the one that will yield the most helpful ideas. The third stage: investigating the problem or issue, the objective of this stage is to obtain the information necessary to deal effectively with the problem or issue. In some cases, this will mean merely searching your past experience and observation for appropriate material and bringing it to bear on the current problem. In others, it will mean obtaining new information through fresh experience and observation, interviews with knowledgeable people, or your own research. The fourth stage: producing ideas, the objective in this stage is to generate enough ideas to decide what action to take or what belief to embrace. Two obstacles are common in this stage. The first is the often unconscious tendency to limit your ideas to common, familiar,...
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...2.www.peapod.com 2.1 Introduction- Peapod is wholly owned subsidiary of international food provider Royal Ahold, and works in partnership with Ahold USA supermarket companies Stop & Shop, Giant Food Stores (Giant-Carlisle) and Giant Food (Giant-Landover). Founded in 1989 by Brothers Andrew and Thomas Parkinson, Peapod has grown from a small, family-run shopping and delivery service in Illinois to America's leading Internet grocer, delivering more than 23 million orders across 24 U.S. markets. As in other pure-play online and clicks-and-bricks alliances, what Peapod brings to the partnership is e-commerce and home shopping expertise, web-based software and ordering systems, web marketing and additional information technology (IT) skills. Ahold’s contributions lie in its considerable buying power, real estate, strong store brand recognition, extensive customer base and category management expertise Products Peapod features over 8,000 products in a range of categories: produce; meat and seafood; deli items; prepared foods; natural and organic foods; Kosher foods; office and school supplies; seasonal items; video products; pet items; health and beauty aids; wine, beer and spirits (in specific markets); and private labels from Stop & Shop and Giant. Markets Served * Illinois - Greater Chicago land * Wisconsin - Milwaukee, Kenosha, Racine, Madison * Indiana - Portions of Lake County in Northwest Indiana * Maryland * District of Columbia * Virginia...
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...Problems at JetBlue JetBlue’s problems were caused by both management as well as technological issues. If JetBlue’s management team would have been better prepared or made different decisions then many problems could have been avoided. One of the things that airlines know is that bad weather can never be predicted or controlled no matter what the circumstance and any airlines should be prepared for the worst, especially during the off season when bad weather occurs the most. From my experience, delaying customers to their flights happens quite often, especially during bad weather. But every airline knows that a customer will only wait for so long before getting discouraged and upset. Having customers wait for several hours or sitting on a plane for up to 11 hours would cause most people to never consider that airline again, in turn JetBlue would be losing large quantities of customers due to bad management decision making. When customers where finally allowed off the plane and already upset they were not able to get ahold of airline agents or had an hour wait time to try to rebook or find out where their bags were. This just added to an already furious customer base. Although JetBlue had a system in place their system was only equipped to handle under normal circumstances and was not equipped for emergencies. If JetBlue had prepared their system for an emergency situation then customers could have handle the situation through the airline agency in a more timely manner and would...
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