Accounting Writing Assignment Response Equity Fund Fraud (Case Study Sample)

Response Equity Fund Fraud
Student’s Name
Institutional Affiliation
Response
The fraud perpetrated in Equity Fund institution was well crafted and involved over 20 individuals. There was a lot of insurance policies sold to companies as well as individuals that were not real per se. This move was designed to ensure that the earnings of the company remained elevated for several years to solidify the stocks of the company in the market. This way the owners of the company stood to gain a lot from the company through such fraud earning millions in profit.
It can be argued that the fraud could not have been successful had the company had independent auditors. The three auditors who were also convicted made it possible to defraud the public of millions of funds. Through their work, all other auditors could not notice any problem with the company’s finances. Therefore, the auditors of the firm were the main loophole exploited in making this fraud a success.
From the Cohen Commission on auditing, it is clear that when auditors are too close to a company, it becomes increasingly difficult to remain impartial. The auditors in the case were too close in the sense that the managers through Levin were too friendly compromising any professionalism between them. This enabled the firm to “buy” the auditors so that they would report what the company expected them to report.
Given that cash ...