Analysis Of Zzzz Best

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ZZZZ Best, Inc. ACCT 406.001 5/13/2014 Hillary Thomas When Barry Minkow and ZZZZ Best went public in mid-1986, Minkow and his close friends came together and became multi-millionaires overnight. The total market value of ZZZZ Best surpassed $200 million, making Barry the youngest Chief Executive Officer in the nation. Now a new sought-after commodity, Minkow’s overnight success did not trigger any red flags to the public or to any audit and law firms at first. Ernst & Whinney, the auditing firm that handled the company’s books during the majority of the time ZZZZ Best was active, wrote an engagement letter to Barry Minkow in September 1986, outlining the four services that they planned on providing for ZZZZ Best as the new auditors; a review of the company’s financial statements for the three-month period ending July 31, 1986, assistance in the preparation of a registration statement to be filed with the SEC, a comfort letter to be submitted to ZZZZ Best’s underwriters, and a full-scope audit for the fiscal year ending April 30, 1987. Of those four services, Ernst & Whinney did not provide the last, a full-scope audit for the fiscal year ending April 30, 1987. Instead, they did issue a review report on the company’s quarterly statements for the three months ending July 31, 1986. Upon completion of reviewing the financial statements, a report is issued stating that a review has been performed in accordance with the American Institute of Certified Public Accountants (AICPA) professional standards, and whether or not the CPA became aware of any material modifications that should be made in order for the statements to be in conformity with Generally Accepted Accounting Principles (GAAP). Reviewed financial statements are o... ... middle of paper ... ...l of the red flags that had been raised during the time period they were assigned as the auditors for ZZZZ Best. ZZZZ Best and Barry Minkow soon collapsed in May 1987 after an article in the Los Angeles Times was published that disparaged the boy wonder. From an early age, Barry was intrigued by credit card forgeries and stealing money, and getting away with it boosted his ego and self esteem and made him curious to see how far he could take it. That newspaper article resulted in a domino effect of events that resulted in the collapse of ZZZZ Best in less than three months of going viral. A small brokerage firm began short-selling ZZZZ Best’s stock, forcing the price into a tailspin. Most importantly, the article pushed Minkow into a frenzy and forced him to make several daring moves that cost him more than what all of his millions could buy him, his credibility.

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