Suchergebnisse

• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 34: Royal Ahold (The Netherlands, 2003)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …the most prominent and re- spected corporations in the Netherlands. For several years, it had been named the most desirable employer and the company… …and the French firm Carrefour S.A. had larger annual food retail sales than Ahold. In 2002, the com- pany’s reported sales were EUR 62.7 billion; it… …share quickly by purchasing existing grocery chains in foreign countries. In 2000, the company completed its most ambitious acquisition when it… …was forced to buy out Velox’s interest and absorb its liabilities. Ahold had failed to disclose that it had committed itself to purchase the residual… …ownership interest in the joint venture if Velox de- faulted on its outstanding debts. Now Ahold had to announce that it was taking over USD 492 million in… …subsidiary. In early 2003, Ahold surprised investors when it announced that U.S. Foodservice had overstated earnings by at least USD 500 million in 2001 and… …by USD 880 million over three years, and that it would have to take pre-tax charges of nearly USD 1 billion on group level. The size of the new… …figures shocked Ahold’s new management as much as it did analysts and investors. The company immediately authorized an investigation by law firm White &… …investigations, it was ultimately found that there were two principal sources of material misrepresentations in Ahold’s consolidated financial statements: (1)… …at USF centred around the way it accounted for “promotional allowances”. USF typically purchased products from a variety of suppliers at full price…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 27: Flowtex (Germany, 2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …precedent,” said judge Michael Meyer. He expressed his incredulity that the scam could have lasted for nearly ten years without being noticed. “It is amazing… …debts that needed to be covered.” Flowtex, based in Ettlingen near Karlsruhe in southern Germany, marketed horizon- tal drilling equipment. It… …each machine was fitted with the correct plates and documentation. It did not appear to strike KPMG as strange that machines they had chosen at… …bond to its customers as being “an attractive investment opportunity”. It would have been the first bond issue from a privately owned German… …their losses, which they refused to quantify. Why due diligence failed to expose the apparent Flowtex scam is still unclear. It is noteworthy that… …Flowtex case, said the complex structure of the Schmider-Kleiser group had “certainly played a role” in the deception. However, it emerged that KPMG… …pretend business. In 2002, the well-known auditing firm paid creditors of the bankrupt drilling equipment maker EUR 50 million. KPMG said that it made the… …against the state of Baden-Wuerttemberg after claiming that it failed to act in time against Schmider and Kleiser. The plaintiffs claimed that the tax… …records are examined before it issues securities. It is a textbook example of what can go wrong when banks and auditors place too much reliance on the…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 38: Daewoo Group (South Korea, 1999)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …biggest accounting frauds in history. It predated Enron, WorldCom, Tyco, Parmalat and the other corporate scandals that more recently devastated… …. It produced autos, ships, televisions, pianos, refrigerators, aerospace components, and practically everything else – except significant profits… …weight of more than USD 80 billion in debts; it had been unable to meet its skyrocketing interest payments. Daewoo had become a huge financial black hole… …“rags-to-riches” founder of Daewoo Group ended in a big corporate fraud scandal. Although the government prosecutor’s office released only scant details, it… …group’s flagship company) was unable to keep the plant running, and the Ukrainian government complained. To placate it, Daewoo surreptitiously shipped… …organization. Located in Lon- don, it acted as the nerve center for the group’s financial machinations overseas. Only five key persons, who proceeded under the… …utmost secrecy, oversaw its busi- ness. The BFC never appeared on Daewoo’s balance sheets. Prosecutors portrayed it as Kim’s slush fund, but could not put… …from car-export revenues. Prosecutors could not say how the money was spent, but industry experts and analysts thought at least part of it was… …destination of the money (allegedly up to USD 20 billion) remained unclear. But it is very likely that it was siphoned off for political lobbying purposes and… …manner in which it was conducted and the way in which it lasted undetected until the end. An economic adviser to President Kim Dae Jung said much of what…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 21: HealthSouth (2003)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …, but hindsight proved otherwise. It be- came apparent that for many years, HealthSouth’s financial disclosures had neither represented economic reality… …country as well as in Australia, Puerto Rico, and the United Kingdom. It employed 51,000 workers and had generated USD 4.3 billion in reve- nue in 2002… …. But shortly after it had become publicly traded in 1986, the company had begun to artificially inflate its earnings to match analysts’ expectations and… …of Wall Street’s expectations, Scrushy would tell management to “fix it” by recording false earnings to make up the shortfall. (The conspirators also… …from hospitals and clinics, add bogus amounts at headquarters and blend it altogether. Thus, while the rehabilitation hospitals and medical centres… …tried to persuade CEO Scrushy to abandon it. But, according to the SEC complaint, Scrushy insisted that the scheme continue because he did not want the… …August 27, 2002, HealthSouth issued a press release stating that it expected Transmittal 1753 to reduce its annual earnings by approxi- mately USD 175… …an SEC accounting probe at the healthcare rehabilitation company. Following news of the probe, Standard & Poor’s announced that it lowered… …belonged in a psychiatric facility, not a rehab facility, but we had a bed available and we were encouraged to take them.” “In this sea of fraud, is it… …, Accounting Fraud in U.S. Companies 141 citing systematic deception on the part of HealthSouth’s executives. It was a well- conceived and -executed…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Introduction

  Professor Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …17 Chapter 1: Introduction 1.1 Fraud: A Constant Threat to Companies around the World Fraud is nothing new. History has shown that it has… …criminals (“crime in the streets”). With regard to the business world, it is common knowledge today that there has always been white-collar crime. In… …help a business sur- vive in today’s economic climate, 47% of the respondents thought it was acceptable. Making cash payments to win business was… …practices, and it will also illustrate the results of their deceptions. First of all, however, it may be helpful to define accounting fraud. According to… …business performance and cre- ates a false impression of the company’s financial health. Clearly, accounting fraud is illegal; it subjects the company and… …valuable insights to all of these anti-fraud practitioners, and assist them in rooting out accounting fraud and preventing it in the first place. In… …in a range of approaches: it is the best method to com- plement the traditional lecture sessions. Introduction 23 This book consists of 44… …Harvard professor, once said: “Those who do not remember the past are condemned to repeat it.” Referring to Santayana, this book looks back to the past in… …order to gain a better understanding of the nature of ac- counting fraud and how to prevent it in the future. There is no better way to under- stand and…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 16: Tyco International (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …and speciality products, packaging materials, as well as undersea telecommunications networks and financial services. It operated in 100 countries… …, while being nominally based in a tax haven, Tyco continued to operate out of Exeter, New Hampshire, and Boca Raton, Florida. (At this point, it is also… …shareholder suits.) – Tyco accumulated a massive amount of so-called “goodwill” on its balance sheet. It paid high prices for acquired companies, and rather… …than writing this cost off as an expense (which would have to be reported to shareholders as a reduction in earnings), it created goodwill. Since the… …middle of 2000, Tyco accumulated over USD 20 billion of goodwill on companies that it acquired for USD 24 billion. In other words, the actual hard assets… …acquisitions would create in the course of the further development of the companies. – Tyco did not report acquisitions that it stated were small enough to be… …con- sidered “immaterial” under US-GAAP. From 1991 through 2001, Tyco spent USD 8 billion on more than 700 acquisitions that it said were not material… …acquisitions, but it had ultimately decided not to take action. In Kozlowski’s view, the SEC probe qualified as an endorsement, and he emerged from the… …York City’s Upper East Side. (Later on, Kozlowski became the object of ridicule after it was revealed that the furnishings at his opulent Fifth Avenue…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 30: Lernout & Hauspie Speech Products (Belgium, 2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …of sophistication of the fraud and the amount of imagination that went into it”. Speaking at a news conference in Brussels, he said the fraud… …wowed investors with techno-mirages of humans chatting with computers, it made money with low-tech offerings. Its speech programs in their infancy were… …Europe), although it had never been profitable and had just a few million dollars in annual revenue. As with many high-tech firms, the hope lay in a… …L&H’s hey- day, it hired a former Belgian prime minister as its chairman, and Bill Gates visited, lauding the innovative and ground-breaking speech… …commissioned a special midyear audit by L&H’s regular auditor, KPMG. On November 9, 2000, L&H announced that it would revise financial statements for 2… …with another venture it helped start, Brussels Translation Group N.V. (“BTG”), this time to develop software for auto- matic translation from one… …late 1998, L&H launched a new and elaborate scheme to create additional cus- tomers and, thus, to bolster its reported revenue. It helped create 30… …and intelligence services, developers of strategically impor- tant technologies, and investors. It was supposed to be a win-win-situation. The… …technologies and a helping hand in getting orders from other government agencies. The BND, in turn, got first class technology which it couldn’t develop…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 33: Vivendi Universal (France, 2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …conglomerates, including the Universal film studios and the Uni- versal music group in the United States. It had securities traded on the Paris Stock Exchange as… …his ouster by Vivendi’s board, Messier had issued several press releases that falsely stated that Vivendi did not face an immediate cash shortage. It… …, announced that Vivendi would have run out of money within days because banks had refused to extend it more credit while Messier remained in charge. In… …Companies 195 it had used them as collateral for a loan. However, it had tried to book the loan as revenue until the French stock market regulator… …difficult to decipher; for example, many experts noted that it was hard to distinguish what debt belonged to the environment business and what belonged to… …November 2002, the beleaguered company disclosed that it was also facing a criminal investi- gation by the U.S. attorney’s office in New York, along with a… …big awards in such cases.” Accounting Fraud in European Companies 196 In December 2003, the SEC announced that it filed and simultaneously… …adjustments were made so that the company could meet the ambitious earnings targets that it had communicated to the market. – Vivendi failed to disclose… …arrested in Paris, facing accusations of share-price manipulation, in- sider trading, and embezzlement. First, it was alleged that Messier and his top team… …before the company’s financial situation began to unravel. Finally, it was alleged that generous payments made by Messier to large shareholders and…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 44: Satyam Computer Services (India, 2009)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …confidence in India Inc., and it is very difficult to restore their confidence.” In 2009, Satyam Computer Services was the fourth-largest Indian… …expanded it from a handful of employees into a back-office giant with a workforce of 53,000 and operations in 66 countries. Satyam delivered… …outsourcing solutions to nearly 700 clients, including 185 “Fortune 500” companies. Thus, it served as the back-office for some of the largest banks… …responsible for clients’ finances and accounting.) “For years, Ramalinga Raju was lionized as one of the whiz-kids of the Indian IT sector,” said one… …started as a mar- ginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has… …attained unmanageable propor- tions as the size of company operations grew,” Raju wrote. “It was like riding a tiger, not knowing how to get off without… …lents were, in fact, made out of thin air. Revenue for the quarter was 20% lower than reported, and the company’s profit margin was a fraction of what it… …staff. – Merrill Lynch, the U.S. investment bank, was engaged by Satyam to explore merger opportunities for the IT outsourcing giant. But within just… …fluctuations in the amount of “unbilled revenue” the company reported. (Unbilled revenue is work done for a customer but not yet invoiced: it represents future… …earnings. Accounting Fraud in Asian Companies 252 However, there is usually little documentation associated with the number, so it is easy to…

  Alle Treffer im Inhalt anzeigen
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 5: Phar-Mor (1992)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …dis- count” drugstore in Cleveland and decided they had seen the future. They acquired a single drugstore in Youngstown, Ohio, and dreamt of building it… …un- covered the fraud. Phar-Mor’s board of directors insisted that it was plenty active, but fully deceived until it got a tip in late July 1992. Monus… …, but it was disbursed on a Phar-Mor bank account. The travel agent thought it odd that Phar-Mor would be paying these expenses. Since she was an… …“Cookies”. The fraud team used these entries to inflate inventory and earnings. As it would not have been practical to carefully scan all the packets, the… …the operating GLs, the fraud would have been all over. Because the physical inventories were completed during the fiscal year, it was ne- cessary… …did account for a portion of the spike, investigations indicated that a large part of it was due to fraud. The spike was clearly a big red flag that… …Coopers & Lybrand recklessly overlooked. It should have caused an experienced retail auditor to have suspicions about inventory at Phar-Mor. But Coopers &… …(for example, at Christmastime it would be the same concept), and that they relied on their tests of the gross profit schedules. If any large or… …fraud was uncovered, it was determined that Phar-Mor’s actual gross mar- gins were really much lower than the budgeted 15.5%. Accounting Fraud in… …master chef”, the company’s board said. As a private company, Phar-Mor was not exactly structured for scrutiny. It didn’t have to file with the SEC…

  Alle Treffer im Inhalt anzeigen