...Samar, Novah Mae B.BSA-4 July 12, 2013Diansay, Yra Dessa T.1.SAS No. 106 “Audit Evidence’, identifies the principal “managementassertions” that underlie a set of financial statements. The occurrenceassertion was particularly critical for ZZZZ Best’s insurance restorationcontracts. ZZZZ Best’s auditors obtained third-party confirmations tosupport the contracts, reviewed available documentation, performedanalytical procedures to evaluate the reasonableness of the revenuesrecorded on the contracts, and visited selected restoration sites.Comment on the limitations of the evidence that these proceduresprovide with regard to the management assertion of occurrence.Upon the performance of those procedures, the auditors of ZZZZBest Inc. had obtained evidence in order to draw reasonableconclusions on which to base the audit opinion. However, theseevidences are subject to limitations due to factors not controlled by theauditors. First limitation of the evidence is its insufficiency to supportthe occurrence, reliability and relevance of events and transactions.Mere paperwork is not enough to prove an event to have existed. Italso needs inquiries from people accountable in recording orrecognizing such events. Moreover, there’s a risk in being dependenton evidences provided by the management itself. Auditors should askcooperation from the third parties in order to verify all records. Secondlimitation is the rules implemented by the client which prohibit auditorsto further inspect or review...
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...Case 4-6 ZZZZ Best* The story of ZZZZ Best is one of greed and audaciousness. It is the story of a 15-year old boy from Reseda, California who was driven to be successful regardless of the costs. His name is Barry Minkow. Minkow had high hopes to make it big – to be a millionaire very early in life. He started a carpet cleaning business in the garage of his home. Minkow realized early on that he was not going to become a millionaire cleaning other people’s carpets. He had bigger plans than that. Minkow was going to make it big in the insurance restoration business. In other words, ZZZZ Best would contract to do carpet and drapery cleaning jobs after a fire or flood. Since the damage from the fire or flood probably would be covered by insurance, the customer would be eager to have the work done. The only problem with Minkow’s insurance restoration idea was that it was all a fiction. There were no insurance restoration jobs, at least for ZZZZ Best. In the process of creating the fraud, Minkow was able to dupe the auditors, Ernst & Whinney into thinking the insurance restoration business was real. In fact, over 80 percent of his revenue was allegedly from this work. The auditors never caught on until it was too late. How Barry Became a Fraudster Minkow wrote a book, Clean Sweep: A Story of Compromise, Corruption, Collapse, and Comeback** that provides some insights into the mind of a 15-year old kid __________________ * The facts are derived from a video...
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...and you are only 20 years old. Your personal net worth is more than $100 million. You own a signature red Ferrari and Oprah is begging you to be on her show. It's the stuff of fairy tales, but for one man, it was the beginning of an odyssey that would lead to prison. Meet Barry Minkow who in 1982, when he was only16, founded ZZZZ Best Carpet Cleaning. Over the next several years, he franchised the chain and took it public. "In the three-year period from 1984 to 1987, the com¬pany’s net income surged from less than $200,000 to more than $5 million on reve¬nues of $50 million. When ZZZZ Best went public in 1986, Minkow and several of his close associ¬ates became multimillionaires overnight. By the late spring of 1987, Minkow’s stock in the company had a market value exceeding $100 million, and the total market value of ZZZZ Best surpassed $200 million." (Knapp) Less than two years later, Minkow had been exposed as a fast talking con artist who bilked his closest friends and Wall Street out of millions of dollars. Barry Minkow began serving a twenty-five-year prison sentence after being tried and convicted on fifty-seven counts of securities fraud. ZZZZ Best differed in part from a typical Ponzi scheme in that Minkow’s carpet-cleaning business was very real. "Indeed, the carpet-cleaning division won high marks for its quality." (Miller) However, its insurance restoration division, which eventually accounted for 86 percent of company revenues, was nonexistent. Minkow raised money...
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...documentation that was provided by the management of ZZZZ best company, they should verified from 3rd parties the claims made by ZZZZ best in their financial statement and also audits usually work according to the audit fees charged, depended on the audit fee agreed that will determine the scope of the audit. 3. The apparently reliable evidence can lead an auditor to an improper conclusion in the case where these evidence were fraudulently designed by the management and also where the auditor did not carry out an audit test, or where he did not do a physical inspection. 4. The purpose of predecessor-successor auditor communication is to ensure possible misstatements in financial statements are communicated from one auditor to the next. The successor has the responsibility of initiating these communications. In summary information that a successor should obtain include but not limited to * Information that might bear on the integrity of management. * Disagreements with management as to accounting principles, auditing procedures, or other similarly significant matters. * Communications to audit committees or others with equivalent authority and responsibility regarding fraud, illegal acts by clients, and internal-control-related matters. * The predecessor auditor's understanding as to the reasons for the change of auditors. 5. Yes, because he was unable to ask third parties working on any of ZZZZ best’s sites any questions without breaching the contract...
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...EACC: Real Options on M&A Case 1: The Value of a Company with an Option to Expand Firm Z is facing the chance to expand its business. Currently, the value of the assets in place of this company is e18M. The company has the chance to expand its business in 30% with an investment cost of e4M. The volatility is 20%, the dividendyield is 6% and the risk-free rate is 2%. Case questions: 1. What is the value of this company? 2. Describe, based on the real option approach, what are the characteristics of the optimal decision. Case 2: The Optimal Timing for Merging I Firm C is facing the chance to acquire Firm D. Consider the following information about this operation: Expected value after the acquisition e67M Value of company C (stand alone) e31M Value of company D (stand alone) e24M Volatility of the synergies 25% ”Dividend-yield” 5% Risk-free rate 3% Expected merging costs (consultancy, legal costs, integration costs, ...) Case questions: 1 e2.5M 1. Assuming the price paid for company D corresponds to its market value, what’s the optimal trigger for merging? 2. Assuming the shareholders of company D demand a premium of 20% for the operation, what should the managers of company C do? 3. Determine the terms that turn the shareholders of company C indifferent about an immediate acquisition. 4. Assume that there are no other companies interested to buy company D, and D is always a target (and never a bidder). Regarding the situation presented in 2) what is the market value...
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...INNOVATION ACTIVITY For the innovation your group has been given, use the course companion notes to agree: 1. What is the greatest benefit and why? * 3-D printers are able to create prosthetic limbs for disabled people, potentially saving lives and making life more comfortable. Not only can they be utilised in science, but in technology used in engineering such as creating model of film sets, parts of machinery and even in fashion to create unique garments due to their strong but light capabilities. * Cost effective; in terms of making prototypes of e.g. engines of a car, as they need to make a specific amount of the prototype and at specific measurements and details. 2. From the 3 main areas of risk, which is the main risk and why? (Competition; Uncertain returns; Availability of finance.) * Uncertain returns-demand may fluctuate; there is no guarantee of future revenues/returns. (Depends on the state of the economy. People may not be able to afford these very expensive, tailored products.) * Availability of Finance-these products are tailored to the specific individual’s needs (how big? How thick?), and therefore impacts the business as it would be very expensive to create these products. 3. One person representing each of the main company functions, explain what the key implications for your function of progressing further with your innovation. * HR-the business would need to employ highly skilled employees to make tailor crafted products...
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...Lecture 1: Introducing Culture and Globalization Globalization: the increasing interconnectedness of the world (interconnectivity) Culture: shared ways of understanding and doing things (conceptual lense) and is socially constructed, hence changeable Culture Core question of course: does increasing globalization lead to the spread of new global cultures (more cultural sameness) or to more cultural differences? Globalization increases cultural similarities and differences the four main characteristics of globalization ~ Cochrane and Pain 1. stretched social relations, 2. intensification of flows, 3. increasing interpenetration of cultures, 4. an development of global infrastructure Globalization is driven by modern science, capitalism, and industrialism The four power players in globalization (‘nation states’, ‘military’, ‘division of labour’, and ‘capitalism’) ~Giddens Two main forms of culture contact: hybridization and differentiation Globalization involves reflexivity, i.e. ‘old certainties’ disappear Reflexivity is the idea that both individuals and society are defined not just by themselves, but also in relation to each other. Therefore they must both continually redefine themselves in reaction to others and to new information Lecture 2: Is There a Global Culture? • • • Power relations: having the ‘right’ to define what things are (Giddes, lecture 1) ‘Us – them’ distinctions The power relations of four groups in society: Majorities and elites are dominant...
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...| UNIVERSITI TUNKU ABDUL RAHMAN (UTAR)FACULTY OF BUSINESS AND FINANCE (FBF) | Unit Plan 1. | Unit Code &Unit Title: | UBMM2023 Organisational Behaviour | 2. | Course of Study: | FBF:Bachelor of Marketing (Hons)Bachelor of Business Administration (Hons) Entrepreneurship (EN)Bachelor of Commerce (Hons) Accounting (AC)FICTBachelor of Information Systems (Hons) Information Systems EngineeringBachelor of Information Systems (Hons) Business Information Systems FSCBachelor of Science (Hons) Biotechnology (BT)Bachelor of Science (Hons) Logistics and International Shipping | 3. | Year of Study | Flexi structure | 4. | Year and Trimester: | 201601 | 5. | Credit Hour | 3 credit hours | 6. | Lecturing hours and Tutoring hours | 2 hours lecture per week for the duration of 14 weeks1.5 hours tutorial per week for the duration of 14 weeks | 7. | Lecturer: | Lead Lecturer:Ms. Norhayati Bt Md Isa (norhayatim@utar.edu.my)Co-lecturer:Ms. Lim Yong Hooi (limyh@utar.edu.my) | 8. | Tutors: | FBF/FICT/FSCMs. Lim Yong Hooi (limyh@utar.edu.my) Ms. Cheah Ching Mun (cheahcm@utar.edu.my)Ms. Seow Ai Na (seowan@utar.edu.my)Ms. Norhayati Bt Md Isa (norhayatim@utar.edu.my) | 9. | Moderator | Ms. Lai Ka Fei | 10. | Mode of Delivery: | Lecture and Tutorial | 11. | Objective: | To enable students to understand the impact that individuals, groups/teams and structure have on behaviour within organisations for the purpose of improving...
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...A California appellate court recognized Ernst & Whinney not liable to Union Bank of California which allegedly relied on Ernst’s review report in extending $ 7 million to ZZZZ Best Co. I agree with court’s decision because Ernst & Whinney never issued an audit opinion on financial statements it was just a review report which was disclosed. However, I do not justify Ernst & Whinney because the auditors besides from failure to notice ‘red flags’ had done few mistakes which lead to the law suit. The first mistake that the auditors made involved Mr. George Greenspan during the 1986 audit. This was the first audit since ZZZZ Best became a public company and the mistake involved the inspection of the insurance restoration sites. Mr. Greenspan had talked with Tom Padgett, and Mr. Padgett confirmed the insurance contracts were real and showed proper documents to back them up, Mr. Greenspan never actually inspected any of the actual insurance restoration sites. Doing so could have stopped the scam from hurting the public stockholders, especially because they take in such a huge percentage of income for ZZZZ Best. The second mistake involved Ernst & Whinney, was that Greenspan reported during the interview to the congressional subcommittee, that Ernst & Whinney never got in touch with him to talk about ZZZZ. If this conversation occurred, Greenspan might have been able to discuss his neglection to inspect the insurance restoration sites, which therefore could have given Ernst & Whinney...
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...auditors should question the increase in accounts receivable, which was 33% of sales and represents four months on an annualized basis. The auditors should question where the cash is from the collection of sales (Sales of $4,845 less A/R of $693 less Cost of goods sold of$2,050). The company should have approximately $2 million to pay down liabilities or invest in assets. With the cash flow with borrowings of current liabilities and notes payable, the company had approximately $6.5 million before paying cost of goods sold or approximately $4.5 to pay down liabilities or invest in the company, yet cash only increased $50,000 for the year. Where was the cash used? 1. ZZZZ Best Company, which was initially a small rug-cleaning business, was founded by Barry Minkow when he was sixteen years old. 2. Minkow transformed ZZZZ Best into a leading company in...
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...financial statements is a form of attestation service that the auditor issued a written report to express an opinion. Financial statements are materials that correspond with generally accepted accounting principles. When giving the information of the financial statements, ZZZZ client makes several claims about their financial conditions and results of restoration business operations. External users that trust the financial statements to make business decisions to observe the auditor’s report a warning of the statements’ trustworthiness. ZZZZ best company value the auditor’s assurance because of the auditor’s independent firm from the client. The knowledge of these financial statements that they report matters is important. A review of the financial statements is another method of attestation service, used by Certified Public Accountants. An audit does provide the highest level of assurance, a review provision that delivers a reasonable amount of assurance on the financial statements. A review would be further acceptable to meet the external user’s requirements. A CPA firm can charge a small fee other than audit report. Ernst & Whinney, independent accountants, has never issued an audit opinion for ZZZZ Best Company; however, they decided to do a review report. As stated in their engagement letter, the auditors provided three months of service until the contract end. There was a limit to prepare less possibility to examine; therefore, it means a low level of assurance...
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...Abstract [Doctoral Study Title] by [your official name] MS, [university], 200X BS, [university], 200X Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University [last month of quarter you plan to graduate] 200X Abstract Insert abstract here; it should be no more than one page. Abstract text must be double-spaced with no paragraph breaks. Describe the overall research problem being addressed in the first couple of sentences and indicate why it is important (e.g., who would care if the problem is solved). You can include a general introduction of the issue in the first sentence, but you need to move to a clear statement of the research problem being addressed. Identify the purpose and theoretical foundations, if appropriate, summarize the key research question(s), and briefly describe the overall research design, methods and data analytic procedures. Identify the key results, 1 or 2 conclusions, and recommendations that capture the heart of the research. Conclude with a statement on the implications for positive social change. Here are some form and style tips: (a) Limit the abstract to one typed page; (b) maintain the scholarly language used throughout the doctoral study; (c) keep the abstract concise, accurate, and readable; (d) use correct English; (e) ensure each sentence adds value to the reader’s understanding of the research; and (f) use the full name of any acronym and...
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...Zzzz Best Company, Inc. Case 1.9 Zzzz Best Company, Inc. Case 1.9 Case 1.9 ZZZZ Best Company, Inc. Delta. Describe the elements of the Fraud Triangle that apply to this case. Assume you are the perpetrator. Is there a better way to perpetrate this fraud? If there is, describe your method. Specify practical recommendations for the client to prevent this fraud from occurring in the future. The first element of the Fraud Triangle in the case of ZZZZ Best, case 1.9 is Incentives/Pressure. Incentives/Pressure- As a result of the pressure placed on a person who is only a teenager in a tough business, one who faced a lack of working capital, the lack of assets and little profit make it difficult for a person of this stature to achieve financing to produce cash flow for sustaining of operations. One quickly realizes that through fraud a person could obtain funding to sustain operations. Through credit card fraudulent charges and check kiting and to stage theft to fleece one’s insurance company, producing more cash flow, one can raise Is this essay helpful? Join OPPapers to read more and access more than 600,000 just like it! get better grades quick and easy money. Through this experience with these types of fraud, it is realized quickly that one could bypass internal controls and create assets to bolster the company’s financial statements. From this point, with beating the system proving to be so easy, the next step is to forge friendships and acquaintances...
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...Phần 1 Ngày 19 tháng 5 năm 1987, một bài viết ngắn trong The Wall Street báo cáo rằng ZZZZ Company, Inc ..Reseda, California, đã ký một hợp đồng trị giá 13,8 triệu USD bảo hiểm cho dự án phục hồi. dự án này chỉ là gần đây nhất của một loạt các công việc phục hồi lớn có được của ZZZZ Best (phát âm là "Zee Best"). Nằm ở San Fernando Valley của miền nam California, ZZZZ Best đã bắt đầu hoạt động vào mùa thu năm 1982 giống như 1 doanh nghiệp nhỏ, với hoạt động là làm sạch thảm tại từng nhà. Dưới sự chỉ đạo của Barry Minkow, 1 người hoạt bát và hướng ngoại mới 16 tuổi đã thành lập công ty và bước đầu hoạt động nó từ nhà để xe của cha mẹ, Zzzz Best có những kinh nghiệm bùng nổ tăng trưởng doanh thu và lợi nhuận trong những năm đầu tiên tồn tại của nó. Trong ba năm từ 1984 đến 1987, thu nhập ròng của công ty tăng từ ít hơn $200000 đến hơn $5 triệu trên tổng doanh thu $50 triệu USD. Năm 1986 ZZZZ Best trở thành công ty cổ phần và lên sàn, Minkow và một số các cộng sự thân cận của ông đã trở thành triệu phú trong 1 đêm. Bởi vào cuối mùa xuân năm 1987, giá trị thị trường của cổ phiếu công ty Minkow vượt quá $ 100 triệu USD, trong khi tổng giá trị thị trường của ZZZZ Best đã vượt ngưỡng 200 triệu USD. Giám đốc điều hành trẻ nhất trên cả nước được hưởng "good life", trong đó bao gồm một ngôi nhà sang trọng trong một khu ngoại ô của Los Angeles và một chiếc ô tô Ferrari màu đỏ. Minkow có 1 sức hút và với tài năng kinh doanh đã làm cho anh thành người được săn đón trên các chương trình truyền...
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...Barry Minkow founded ZZZZ Best (pronounced Zee Best) while 15 years old and a sophomore in high school. The business started in his parent’s garage with three employees and four telephones. Minkow struggled to meet basic expenses in the beginning. In January 1986, ZZZZ Best went public and began to sell shares on NASDAQ. However, the company began to rapidly decline. In July 1987, Minkow resigned and the company sued him for fraud allegations. This landed Minkow in federal prison, with a sentence of 25 years for 57 counts of fraud. In the beginning, Minkow struggled to meet the basic expenses of his company. Two banks closed his business accounts because the California Law did not allow minors to sign binding contracts, including checks. He began to receive several customer complaints as well as the demand for payment from suppliers. At times, Minkow also found it hard to meet payroll. Because of the lack of operating capital, Minkow financed his business by check kiting, stealing and selling his grandmothers jewelry, staging break-ins at his offices, and running up fraudulent credit card charges. With the help of Tom Padgett, an insurance claims adjuster, ZZZZ Best branched into the “insurance restoration” business. Minkow forged many documents which claimed that the company was involved in several restoration projects for Padgett’s company. Both Minkow and Padgett formed a fake company, Interstate Appraisal Services, which verified the details of the restorations to Minkow’s...
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