Forensic Accounting

932 Words2 Pages

The term “fraud” is commonly used to describe the use of deception to deprive, disadvantage or cause loss to another person or party. This can include theft, the misuse of funds or other resources, or more complicated crimes such as false accounting and the supply of false information. This case study of Mountain State Sporting Goods is an excellent example of individuals acting on the opportunity to financial benefit by committing what they thought was harmless adjustments, but in reality was fraud. In this case study there are is just so much wrong with this company and how it operates. We noticed multiple areas of concern before even seeing the financial statements and my concerns were confirmed upon further investigation.
The fraud started with Mr. Workman taking control over the entire business and putting himself on the bank signatory, which allowed him to write checks. After this he decided to hire his longtime friend and recent CPA Mr. Hess as company accountant, who was there to help Mr. Workman with finances of both personal and business. Mr. Hess had just started his new CPA firm, whenever he was hired and was not liked by all employees of business. Sue Bryant actually says that she thinks that Mr. Hess saw JD’s death as an opportunity. I believe he was well aware of Mr. Workman’s fraud and even got in on the action by having Mr. Workman invest business proceeds into a condo instead of a down payment on another building. Anita stated in her interviews that Mr. Hess took unclaimed items from business, so he is no better than Mr. Workman. Mr. Workman is held to the AICPA Code of Conduct as a CPA and must be in compliance with them. Mr. Workman broke Section 101, which is states that a member in public practice shall be ...

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... the business because they could possibly have no building for their dad’s pawn shop business come the end of the lease term. Before Mr. Workman took over the company was valued at $350,000 by a Certified Valuation Analyst (CVA), but after a few years under Mr. Workman I’m sure the company valuation would be considerably less based off of the many fraudulent transactions. The cash flow of the company is another aspect affected by Mr. Workman’s fraud. After a few calculations, I was able to determine that the variances actually match the retained earnings. Which is usually a result of accounts not going together and amounts being staged. The company reputation is unfortunately shattered after these finding these accounts of fraud, because no one will want to pawn their stuff with a business that is known to take pawned items or give you an unfair loan on your stuff.

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