Financial Statement Fraud Schemes Essay Example | Topics and Well Written Essays - 1000 words

Financial Statement Fraud Schemes - Essay ExampleThis case involves several characters, namely Mr. Karina Ramirez, the director inbred auditor at Apollo Shoes Company, the engagement manager Mr. -Darlene Ward law, Mr. Arnold Anderson the engagement partner and the intern Bradley Crumpler (Timothy, Loretta, & Kenneth, 2011). The communication in this go with entails the use of email messages because visible interaction is limited between the employees (Timothy, Loretta, & Kenneth, 2011). Based on this case it can be scrutinized that the company accountants has non been ensuring that all items are properly recorded for clean audit. Additionally, the company does not have enough experts to carry out audit work (Timothy, Loretta, & Kenneth, 2011). This can be scrutinized with a scenario where an intern was incapable of making obligatory entries in the books of accounts as other members were busy doing other duties (Timothy, Loretta, & Kenneth, 2011). Poor financial management has s ubjected customers to financial difficulties and this has made the company fail to accomplish goals and objectives. This can be substantiated by in the director statement when he asserted that the company sales was not strong and therefore there was a need to relook on the marketing plan(Timothy, Loretta, & Kenneth, 2011). 1. Identify potential financial statement fraud schemes would likely be present in Apollo Shoes Company The financial statements fraud schemes has been presented in the Apollos Company case in numerous ways. There have been some underlying discrepancies between the figures in the financial statement and directors reports (Timothy, Loretta, & Kenneth, 2011). For example the audited financial statement indicated that Inventories were valued at $18,825,205.24 while unaudited financial statements indicated that inventories were valued at $$67,424,527.50 (Timothy, Loretta, & Kenneth, 2011). This shows that there was a discrepancy of $48599322.26 obtained by finding the deflexion between the unaudited and audited financial figure which is a clear indication that fraud was taking place (Timothy, Loretta, & Kenneth, 2011). Additionally, inventories were valued at $18,825,205 in the year 2010 while reserves were valued at $3,000,000 (Timothy, Loretta, & Kenneth, 2011). This shows that there was an approximate of fifteen percent reserves in the company. On the contrary, inventories were valued at $67,424,527 in the year 2011 while company reserves were valued at $867,000 indicating that there were only 1.2% reserves (Timothy, Loretta, & Kenneth, 2011). The above discrepancy was so wide and therefore it is a clear sign that unsound acts were taking place in Apollos company (Timothy, Loretta, & Kenneth, 2011). In above connection, it can be scrutinized that the company did not established measures to safe guard shareholders interest. For model between 2009 and 2010, revenues were reported to increase from 10% to 15 % respectively and that customers w ere allotted a fair share according to the directors report (Timothy, Loretta, & Kenneth, 2011). However, this was not the case because the figures could not be reflected in the books of accounts. Additionally, it has been reported that customers were undergoing via financial difficulties (Timothy, Loretta, & Kenneth, 2011). 2. Describe the types of evidence you would look for to