GAAP Accounting Standards Accounting, Finance, SPSS Case Study (Case Study Sample)

Jamaica Water Properties
Student’s Name
Institutional Affiliation
Jamaica Water Properties
Executive Summary
This report is about accounting fraud involving Jamaica Water Properties Inc. The scandal involved top managers and auditors who conspired to misreport the company’s financial accountings statements to safeguard their interests even after it became apparent that the firm’s financial performance was dwindling. Furthermore, the fraud that drove the company to bankruptcy took place although it had contracted Ernst & Young, one of the most reputable auditing firms to monitor its books. The fraud entailed reporting of fictitious assets, misapplication of purchase method of accounting for acquisitions, inappropriate accounting for net operating loss carryforwards, misapplication of the percentage-of-completion method of accounting for long-term contracts, and other accounting malpractices. By the time the fraud was unearthed, the company’s performance in the stock market had waned, leading to a massive loss for the shareholders. The company’s Chief Financial Officer, Ernest Grendi, and his accomplices continued siphoning bonuses from the sale of the stocks by inflating the prices, culminating in massive losses for the shareholders as their equity was wiped out. Creditors also suffered significant losses, even though all the defunct company’s stock was transferred to them when JWP recovered from bankruptcy as Emcor Group Inc. Following the scandal, the prime suspects led by Mr. Grendi were charged, forcing them to pay $352,717 in divestitures and penalties. In the long-term, the fraud did raise pertinent issues regarding the auditing decisions and the authenticity of financial reports in cases where friendship exists between the different parties.