ZZZZ Best Company Fraud Case Study - 1772 Words

ZZZZ Best Company Fraud Case Study 1) At an early age, Barry Minkow was introduced to the carpet cleaning industry by his mother who worked part time as a telephone solicitor for a small carpet cleaning company. This insight of the industry allowed Minkow to understand that the carpet cleaning industry was one which had very few barriers to entry, no licensing requirements, and required only a small amount of capital to enter. Also, because of these few barriers to entry, the industry has historically attracted a larger number of faulty startups in comparison to other industries. At 16 years old, Minkow started his carpet cleaning company under the name of ZZZZ Best Company. Right away he had a difficult time with customer†¦show more content†¦3) There were two external auditors mentioned in the case that dealt with ZZZZ Best. The first was not a firm that was included in the Big Eight accounting firms at the time. George Greenspan was the sole practitioner who performed the first full-scope independent audit for ZZZZ Best. Greenspan insisted that he had properly audited Minkow’s company, and testified that while planning the audit he had performed various analytical procedures to identify unusual relationships in ZZZZ Best’s financial data. Greenspan’s procedures reportedly included comparing ZZZZ Best’s key financial ratios with its industry norms. Greenspan identifies â€Å"unusual relationships† but does not go into detail in order to explain these unusual relationships. This shows that Greenspan did not show enough professional skepticism while conducting the audit and just blew off these unusual relationships. Also Greenspan testified that he had obtained and reviewed copies of all key documents that pertained to the false insurance restoration contracts. It would have been hard for Greenspan to uncover the fraud through the contract paperwork because Minkow and Morze went through such great detail in creating false documents in order to cover the false contracts, but finer details were overlooked by Greenspan. A journalist found one of these finer details which caused the domino effect leading to the destruction of ZZZZ Best. This shows that the first auditor,Show MoreRelatedCase Study Examination And Ethical Questions1646 Words   |  7 PagesCase Study Examination and Ethical Questions Fraud in financial statements is one of the most common types of financial fraud committed by organizations. Tactics are utilized to inflate or deflate revenues and expenses to arrive at the desired financial position of executives of the business. Fraud, however, is not something derived from years of experience. As is the case of ZZZZ Best, the perpetrator of fraud in the case of this organization was its 15-year old owner, Barry Minkow. CaseRead MoreZZZZ Bests Story 2733 Words   |  11 PagesZZZZ Best, Inc. The start of ZZZZ Best: ZZZZ Best started as a carpet cleaning company. Barry Minkow founded ZZZZ Best in his parents’ garage in 1982 when he was only sixteen years old. Due to high competition in the industry, low enter barriers, and bad internal control, this young entrepreneur started to have cash flow problems, and a shortage of working capital. Pressure Leads to Fraud: Under financial pressure, Minkow started to commit fraud. He forged credit card applications, stagedRead MoreDifference Between A Review And An Audit1238 Words   |  5 PagesZZZZ Best Case 1. Difference between a Review and an Audit. The review is much less in scope than an audit, it mostly involves inquiries of client’s personnel and analytical procedures and is usually performed on a quarterly basis, whereas audits are done annually. However, the main difference is in the level of assurance that the reports are providing. While both required to perform inquiry and analytical procedures, the review produces limited assurance, that there are no material modificationsRead MoreEssay on ZZZZ Best Company, Inc.: Case Study1340 Words   |  6 Pages------------------------------------------------- ------------------------------------------------- ZZZ Best Company, Inc. ------------------------------------------------- Case Study 2 ------------------------------------------------- Due Date: March 30,2010 ZZZ Best, Case 1. Ernst amp; Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31, 1986. How does aRead MoreAuditing Cases22626 Words   |  91 PagesAdditional Cases for the Course The case readings have been developed solely as a basis for class discussion. The case readings are not intended to serve as a source of primary data or as an illustration of effective or ineffective auditing. Reprinted by permission from Jay C. Thibodeau and Deborah Freier. Copyright  © Jay C. Thibodeau and Deborah Freier; all rights reserved. 1†¢Ã¢â‚¬ ¢Ã¢â‚¬ ¢ ( Case 61  ® Enron Enrori’s First Few Years hi~ 1985 Enron had assets along the three major stages of the supplyRead MoreCase Analysis : Zzzz Best Company, Inc.1688 Words   |  7 Pages 1. Read Case 1.9, ZZZZ Best Company, Inc. in your text. Answer questions #1, 2, and 4 found at the end of the case. Question # 1 A review is like an audit yet is less in extension and just gives restricted affirmation with respect to the financial statements. This varies with an audit that gives sensible affirmation that no material mistakes or illicit acts are detected. The goal of an audit is to give a sensible freedom of expressed opinion the money related proclamations taken all in all. ARead MoreFraud Triangle Not Good Enough3956 Words   |  16 Pagesto find ways to set fraud in motion – and a new breed of offenders is finding cunning ways to do so. After more than 60 years, the classic fraud triangle of three elements or events that motivate an employee to cross the line has morphed â„ ¢ into Crowe’s Fraud Pentagon. Company boards and senior management must take an offensive stance against the five conditions that precipitate fraud with a clear plan that limits the opportunity for fraud and minimizes the impact when fraud does occur.† JonathanRead Morewall board12806 Words   |  52 Pagesin which the auditors accepted a forged bank confirmation that was allegedly faxed to the auditors by Parmalat client personnel (a copy of the actual forged Parmalat fax is included in these instructor notes for instructor use in debriefing the case). Notice of Erratum: The first printing of the fourth edition includes a minor error in the audit program (schedule C 2). The reference in step three should be to schedule C 14 rather than to schedule C 13. This error will be corrected in subsequent