2 Regina Vacuum Cleaner Company The next part of the video focused on the

2 regina vacuum cleaner company the next part of the

This preview shows page 1 - 2 out of 2 pages.

[2] Regina Vacuum Cleaner Company. The next part of the video focused on the Regina Vacuum Cleaner Company after Donald Sheelan became its new owner. Sheelan invested his life savings to purchase controlling shares of the company. He planned to increase sales and diversify the company’s product line. However, this plan obviously did not work. The newer, cheaper vacuums that were being sold were constantly being returned due to poor design and
Image of page 1
Marchand 2 insufficient materials. Due to his failed attempts to increase the company’s revenue, Sheelan convinced accountant Vincent Golden to cook the books. The company committed fraud by not recording returned goods as they were returned, creating false invoices to create fake receivables, and not reporting all their expenses. All of these things made Regina Vacuum Cleaner Company’s net earnings per share appear higher than it was. The speakers in the video mentioned that auditors might have detected the fraud if they had looked at what Sheelan had to lose, what motivated him, and year-to-year trends. One trend presented in the video was that over three years, net sales continued to increase without any corresponding increase in cost of sales. Other clues included “numerous large journal entries at year end and bill-and-hold schemes concentrated in a few customers.” In the end, Sheelan and Golden turned themselves in and admitted to committing the fraud before it was ever uncovered.
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Fall '17
  • Dr. Glen Cooley

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture