Accounting Frauds ZZZZ Best Company, Inc - 1022 Words

ZZZZ Best company is one of the biggest examples of Accounting Frauds. The founder of ZZZZ best was Barry Minkow. He was a very smart young entrepreneur when he started the company. He was involved in credit card forgeries prior to starting his own carpet cleaning business â€Å"ZZZZ Best Company†. Minkow began his business with small carpet cleaning jobs and he became a multimillionaire in a very short period of time. Minkow met a person named Tom Padgett at Los Angeles Health club. This was the beginning of Minkows big fraud scheme. Padgett was the insurance claims adjuster and Minkow became his friend. After becoming Padgetts friend, Minkow thought of using his friendship with him to make profit in his business. He convinced Padgett to†¦show more content†¦It was stated in the article that Minkow was involved in credit card forgeries at a very young age prior to starting his own company. This was the time when investors and others associated with ZZZZ Best started to step back. This was a major reason that concerned Ernst Whinney about ZZZZ Best. In addition to the news article, Ernst Whinney also received a letter from an anonymous writer, who warned them about the fraud in ZZZZ Best. It was stated that the assets of ZZZZ Best are not properly reported and the insurance restoration contacts were all fraudulent. Ernst Whinney questioned Minkow about the fraudulent Insurance restoration contracts but Minkow was able to prove them that the contracts exist. He gave them the address of a building that was being restored and he bribed the security guard and others to tell them that the building is contracted under ZZZZ Best Company. This was sufficient to prove Ernst Whinney that the contracts stated in ZZZZ Best financial statements were accurate and they did exist. In spite of that, Ernst Whinney did not audit the ZZZZ Best in 1987 due to Minkows bad reputation and the news about the fraudulent contracts. Minkow was successful in getting a way from another audit and continued operating his firm with all the fraudulent contracts and other credit card frauds. According to my understanding of this case, I think that the auditors should beShow MoreRelatedCase Study : The Best Company, Inc.1213 Words   |  5 PagesKathleen Ng ACCT 4501W Case Analysis 1 ZZZZ Best Company, Inc. ZZZZ Best Company, Inc. was founded by Barry Minkow in the fall of 1982, located in San Fernando Valley of Southern California. At this time, he was 16 years old and started a small carpet cleaning operation out of his parent’s garage. Due to client complaints and competition, he was short of capital and needed money but was unable to get help from banks due to low profitability. This led him to think of other ways to finance his businessRead MoreZZZZ Best Company, Inc: An Analysis3666 Words   |  15 PagesZZZZ Best Company Inc. Introduction This paper explores the ZZZZ Best Company which was begun by a 16 year old individual who was able to pull the wool over the eyes of many customers, investors and auditors. This paper will define the difference between review and audit when it comes to financial reports, comments on the procedures provided with regard to the management assertion of occurrence, verification of payments for jobs and how they can lead auditors to improper conclusion, the purposeRead MoreZZZZ Best Company: The Backlash Essay845 Words   |  4 PagesCase 1.9 ZZZZ Best Company, Inc, 1. Ernst amp; Whinney audit firm suffered tremendously from the backlash of ZZZZ Best’s case. One of the issues stemming from ZZZZ Best’s case is the difference between a review and an audit as evidence by civil suit filed by a California bank against the firm. The bank claimed that its decision to grant ZZZZ Best’s loan was based on the opinion of Ernst amp; Whinney review of ZZZZ Best’s financial statements period ending July 31, 1986. The case was ruled in favorRead MoreZZZZ Best Case Study: Understanding Audit and Review1205 Words   |  5 Pagesobtaining an understanding of internal control structure. Also, a review does not assess control risk, tests of accounting records and responses to inquiries by obtaining corroborating evidence through inspection, observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any misstatements on the financial statementsRead MoreElements of the Fraud Triangle 1582 Words   |  7 PagesCase 1.9 ZZZZ Best Company, Inc. Delta. Describe the elements of the Fraud Triangle that apply to this case. Assume you are the perpetrator. Is there a better way to perpetrate this fraud? If there is, describe your method. Specify practical recommendations for the client to prevent this fraud from occurring in the future. The first element of the Fraud Triangle in the case of ZZZZ Best, case 1.9 is Incentives/Pressure. Incentives/Pressure- As a result of the pressure placed on a person whoRead MoreAuditing Cases22626 Words   |  91 Pagespipes, and sold directly either to industrial customers or to regional gas utilities, which then distributed the gas to smaller businesses and customers. Some companies in the industry had assets related to specific activities within the supply chain. For example, some companies owned pipelines but did not produce their own gas. These companies often entered into Enron 2000 annual report, p. 7. Joseph F. Berardino, remarks to U.S. House of Representatives Committee on Financial Services, December 12Read MoreZZZZ Bests Story 2733 Words   |  11 PagesZZZZ Best, Inc. The start of ZZZZ Best: ZZZZ Best started as a carpet cleaning company. Barry Minkow founded ZZZZ Best in his parents’ garage in 1982 when he was only sixteen years old. Due to high competition in the industry, low enter barriers, and bad internal control, this young entrepreneur started to have cash flow problems, and a shortage of working capital. Pressure Leads to Fraud: Under financial pressure, Minkow started to commit fraud. He forged credit card applications, stagedRead MoreBarry Minkow2480 Words   |  10 PagesBarry Minkow – Misrepresentation and Ponzi in 1987 Establishment of ZZZZ Best Company When he was a sophomore in high school, Barry Minkow founded a carpet cleaning company - ZZZZ Best Company in his parents’ garage. At that time, the carpet cleaning industry has few entry barriers and all Minkow needed was a small amount of start-up capital. However, he soon found out that his firm was actually tough to survive in the industry as the ease of entry means fierce competition. The young man encounteredRead MoreEssay on ZZZZ Best Company, Inc.: Case Study1340 Words   |  6 Pages------------------------------------------------- ------------------------------------------------- ZZZ Best Company, Inc. ------------------------------------------------- Case Study 2 ------------------------------------------------- Due Date: March 30,2010 ZZZ Best, Case 1. Ernst amp; Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31, 1986. How does aRead MoreBarry Minkow: Self-Made Millionaire to Bankruptcy3830 Words   |  16 PagesNews (60 Minutes), Barry Minkow, the founder of ZZZZ Best Carpet Cleaning Company said I started with the best of intentions, really I can say that. And when economic pressure reared its ugly head and I couldnt make payroll, I lied and stole and cheated. Prior to declaring bankruptcy, ZZZZ Best was one of the hottest stocks on Wall Street and Barry Minkow was known as the boy wonder of Wall Street. As the youngest CEO of a $300 million company Barry Minkow was the American Dream come true: a