Send the link below via email or IMCopy
Present to your audienceStart remote presentation
- Invited audience members will follow you as you navigate and present
- People invited to a presentation do not need a Prezi account
- This link expires 10 minutes after you close the presentation
- A maximum of 30 users can follow your presentation
- Learn more about this feature in our knowledge base article
Do you really want to delete this prezi?
Neither you, nor the coeditors you shared it with will be able to recover it again.
Make your likes visible on Facebook?
You can change this under Settings & Account at any time.
Transcript of ZZZZ BEST
1982 starts ZZZZ Best, a carpet cleaning business
Finances business with fake info with the help of friends Tom Padgett.
Focuses in insurance restoration business and goes public.
April 1986 first audit completed by George Greenspan.
Ernst & Whinney hired for 1987 audit after George is dismissed by Minkow.
Larry Gray (Auditor) tried to visit restoration sites but was discouraged.
Minkow made auditors sign a confidentiality agreement before visits to "bogus" sites.
May 1987 Los Angeles Times publishes article on ZZZZ Best fraud allegations.
Audit firm resigns on June 1987 after confirmation of fraud. Ernst and Whinney received anonymous letter
Forwarded to the SEC
Served sentence of 25 years. Audit vs. Review Reliable Evidence, Improper Conclusion? AU Section 326
Verified that client actually received payment
Failed to corroborate job payments with payer
Payment of receipts were not enough proof Audit Limited assurance, F/S are fairly presented in accordance to GAAP
Client's internal controls are not considered.
Based mostly on analytical procedures and inquiries of management Attestation Service
Independence required Review Reasonable Assurance F/S are fairly presented in accordance to GAAP.
Auditors are required to know the client's internal controls.
Auditors gathers as much evidence as they need and perform verifications and tests. Occurrence Objective Particularly critical for ZZZZ Best’s insurance restoration contracts
• Auditor procedures:
–Obtained third party confirmations
–Reviewed available documentation
–Performed analytical procedures
–Visited selected restoration sites Limitations on Evidence Third Party Confirmations
-Only one person (Tom Padgett)
-All internal documents
•Restoration Site Visit
-Not confirmed by building owner Predecessor-Successor Purpose: To assist successor auditor in deciding whether to accept.
Successor must initiate to inquire client.
Successor must obtain reasonable inquiries including:
Disagreements in principles, procedures, sig. matters
Communications with appropriate authority (committees) regarding fraud/illegal matters
Reasons for changing auditors ZZZZ Best audit successor Ernst & Whinney resigned as ZZZZ Best auditor, to be replaced by Price Waterhouse.
Ernst & Whinney stated they did not want to be associated with the F/S
However, had supported allegations for fraud but did not inform the SEC. Scope of Audit To obtain reasonable assurance of no material misstatements.
.Discuss the audit evidence acquired and whether they believe the amount of evidence are sufficient and reliable to express an opinion. Confidentiality Agreement Agreement prevented auditors from contacting third parties with regards to ZZZZ best's restoration project.
Effectively limit the scope of the audit.
This would force Ernst and Whinney's auditors to issue a disclaimer, as they would not have been able to obtain reasonable assurance nor obtain sufficient evidence. Life after Fraud Released in 1994 for good behavior.
Married a woman introduced by a fellow inmate after being set free
Became a Pastor and a fraud investigator
2011 - Back in prison for conspiracy to wreck a company's stock value