Auditing - The Anonymous Caller Recognizing It's a Fraud and Evaluating What to Do1 Learning Objectives Appreciate real-world pressures for meeting

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The Anonymous Caller Recognizing It's a Fraud and Evaluating What to Do 1 Learning Objectives Appreciate real-world pressures for meeting financial expectations Distinguish financial statement fraud from aggressive accounting Identify alternative actions when confronted with suspected financial statement fraud Develop arguments to resist or prevent inappropriate accounting techniques It was 9:30 A.M. on a Monday morning, one like a thousand others in the Naked City. Dr. Westland was sipping his morning cup of coffee, pondering Jake van der Kamp’s rant in the South China Morning Post when the call came through. "Hi Dr. Westland, do you have a minute? " "Sure," the professor replied. "I am one of your former students, but if you don't mind, I would prefer to remain anonymous. I think it is best for both of us if I not reveal my name or company to you. I am concerned that the senior executives of the company where I serve as controller just provided our local bank fraudulently misstated financial statements. I need some fast advice about what to do. Currently, I am on my car phone and need help evaluating my next step before I head to my office this morning. May I briefly describe what's going on and get some input from you?" she asked. "Go ahead, let me see if there is some way I can help," responded Dr. Westland. "I am the controller of a small start-up company that I joined three and one-half months ago. On Friday of last week, the company's chief executive officer (CEO), the vice president of operations, and the chief financial officer (CFO) met with representatives of the bank that funds the company's line of credit. One of the purposes of the meeting was to provide our most recent quarterly financial statements. The company is experiencing a severe cash shortage, and the bank recently halted funding the line of credit until we could present our most recent operating results. It was at that meeting, just three days ago, that our senior executive team knowingly submitted financial statements to the bank that overstated sales and receivables accounts." "Earlier on Friday, prior to the bank meeting, I vehemently refused to sign the com-
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This note was uploaded on 01/23/2012 for the course BUSI 4900 taught by Professor B.c. during the Fall '11 term at Carleton CA.

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Auditing - The Anonymous Caller Recognizing It's a Fraud and Evaluating What to Do1 Learning Objectives Appreciate real-world pressures for meeting

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