Crazy Eddie was an American retail store chain run by the Antar family, which was established as a private company in 1969 in Brooklyn, New York by businessmen Eddie and Sam M. Antar. The fraud at Crazy Eddie was one of the longest running in modern times, lasting from 1969 to 1987. Crazy Eddie became a known symbol for corporate fraud in its time, but has since been eclipsed by the Enron, Worldcom and Bernie Madoff accounting scandals.
Commencement of fraud
The fraud began almost immediately, with the management of Crazy Eddie underreporting taxable income through skimming cash sales, paying employees in cash to avoid payroll taxes and reporting fake insurance claims to the company’s carriers. Eddie Antar, the CEO of the company who was the mastermind in the fraud, was skimming money from sales taxes that he only partially remitted to the government, while using part of the money to give steep discounts to customers. Much of the rest of the money he used to fund a partying lifestyle, while secreting a fortune at home and abroad. He also repackaged used and damaged electronics and resold them to customers as new. When electronics companies refused to supply him because he was selling the products to his customers below list price, he instead sourced the products from suppliers in other countries on the gray market.
He used massive sales promotion strategy to promote his company’s name and products. The television ad of the company was very much popular that time. The company began to grow rapidly and had several branches across the country. As the chain grew in size, the Antar family started planning for an initial public offering (IPO) of Crazy Eddie and scaled back the fraud so that the company would be more profitable and get a higher valuation from the public market.
This strategy was a success and Crazy Eddie went public in 1984 at $8 per share. The final phase of the Crazy Eddie fraud began after the IPO and was motivated by a desire to increase profits so the stock price could move higher and the Antar family could sell its holdings over time. Management now reversed the flow of skimmed cash and moved funds from secret bank accounts and safety deposit boxes into company coffers, booking the cash as revenue. The scheme also involved inflating and creating phony inventory on the books and reducing accounts payable to boost profits at the company.
Concealment of fraud
The electronics chain used the young, inexperienced, undereducated and under skilled auditors for the audit purpose. The chain was able to fool young auditors by showing them inventory stock rooms filled with empty boxes of electronics gear, while distracting them with attractive female workers so they wouldn’t bother to look at what was inside or behind the stacks of boxes. They had a concept that if the auditor was wearing a suit, it was sure he wasn’t going to get it dirty by moving the boxes.
Eddie Antar was the mastermind behind the various schemes and hired his relatives to work at the electronics chain to help aid and abet the fraud. Eddie Antar paid for his cousin Sam E. Antar to learn accounting so he could eventually work at the growing company’s small auditing firm, Penn and Horowitz. In 1981, Sam passed the CPA examination with a 90% and scored in the top 1% in the country. He later became the Penn and Horowitz Company’s CFO in 1986. All the family members were bound together by a culture of crime and were working as a team for commitment and concealment of crime.
Exposure of fraud
The company was making so much money that Eddie Antar was having trouble finding places to put it. He ran out of hiding places in his office and home, and eventually began traveling to Israel and Switzerland to stash the money in secret bank accounts. However, the scheme began to unravel when his wife found out he was cheating on her, and the family took sides in the dispute. The fraud was finally uncovered in 1987 after the Antar family was ousted from Crazy Eddie after a successful hostile takeover by an investment group. The acquirer found out how overvalued Crazy Eddie really was and hired another outside auditor to look closely at the books.
Crazy Eddie limped along for another year before being liquidated to pay creditors. Eddie Antar, the CEO of Crazy Eddie, was charged with securities fraud and other crimes, but fled to Israel before his trial. He spent three years in hiding until he was eventually tracked down by authorities in 1992 and extradited back to the U.S. to face criminal charges. Antar and two other family members were also convicted for their role in the fraud. In 1997, Antar was sentenced to eight years in prison and paid large fines. He was later released in 1999.
Crazy Eddie Red Flags
The red flags in the Crazy Eddie, Inc. financial fraud case which could notify the potential fraud were as follows:- The tight knit Antar family ruling Crazy Eddie had virtual absolute control over all aspects of the business. Very poor audit trails and documentation.
Major self-dealing transactions and related party transactions by family members. Substantial increases in wages from below market wages before the company went public. In 1985, an attempt was made to falsify certain store inventories which was uncovered by the auditors. The auditors accepted an excuse that it was not sanctioned by management. Substantial increases in gross margins, profits, inventories, debit memos etc. from prior periods for no logical reason. Significant volume of outstanding deposits in transit at fiscal year end. Individual deposits in transit extremely high in relation to normal amounts at fiscal year end. Unusually high inventory volumes in stores where physical counts were not observed by outside auditors. Inventories in many individual stores were in excess of space capacity.
Major differences between amounts confirmed from vendors for accounts payable and amounts reported on Crazy Eddie’s books and records. Use of “gross margin method” to value inventories during interim periods instead of taking interim inventory counts. Change of accounting methods for purchase discounts and trade allowances in 1987 from cash basis to accrual basis noted in footnotes with no accounting adjustments. Small CPA firm that conducted Crazy Eddie audits before (then big eight firm took over audits) had a significant revenue base from Crazy Eddie. Controller and later CFO for Crazy Eddie (Sam E. Antar) worked for small CPA firm that audited Crazy Eddie books.
Biggest Crazy Eddie Audit Errors
The reason, Crazy Eddie was able to conceal and commit the fraud for such a long time could be the inefficiencies of the auditor and the government to uncover the fraud. The government, auditors and investors were fooled by the company’s flamboyant founder and CEO, Eddie Antar and his family. Some of the biggest Crazy Eddie Audit Errors were as follows:- Assuming a proper audit can be conducted in the absence of credible internal controls. Under educated, under skilled, and under experienced audit staff. Over using audits as training grounds for inexperienced audit staff. Lack of investigative or forensic accounting skills by auditors. Failure to ask proper questions to the concerned persons.
Assuming the answers to good questions as correct without verification. Failure to ask follow up questions.
Lack of professional skepticism.
Allowing company staff to distract auditors from doing filed work by engaging in social conversations, thereby wasting time during audits so they have to rush their work in the end to meet the audit deadline. Failure to simultaneously observe inventory counts in all locations. From 1984 to 1987, the auditors did not observe all store inventories or inventories at all locations. Failure to take copies of full inventories taken when leaving the premises. Failure to conduct proper test counts of inventories by relying on company staff to count boxes and allowing company staff to take possession of test counts to make copies on behalf of auditors. Failure to follow through on analytical test issues.
Failure to conduct all required analytical testing.
Failure to conduct sales cut off testing at year end.
Failure to examine items listed as deposits in transit at year end. Failure to age accounts payable.
Failure to conduct adequate verification of accounts payable balances. Failure to contact vendors when major discrepancies were identified as vendors sent back verification requests. Failure to secure audit work papers left on premises during the audit by leaving keys to trunks containing audit documents on company premises. Allowing company personnel to view audit work papers in process. Auditors signed off on financial reports to outside directors and allowed the issuance of financial statements before the fiscal year 1987 audit was completed and backed into the numbers.
Auditors made misrepresentations to the outside directors about certain questionable practices and directions from the outside directors to investigate them. Auditors made misrepresentations to the SEC about directions from the audit committee to investigate questionable accounting practices. The auditors failed to follow up on recommendations of Crazy Eddie’s outside counsel law firm Paul, Weiss, Rifkind to investigate irregularities concerning sales to a trans-shipper in 1987. The auditors disagreed with recommendations by Crazy Eddie’s outside counsel law firm Paul, Weiss, Rifkind to provide more detailed disclosure on Crazy Eddie sales to trans-shippers and other issues.
The Fraud Triangle
The Crazy Eddie, Inc. financial fraud case, if linked up with the fraud triangle, following result can be obtained:-
Desire of Luxurious Lifestyle
Expensive extramarital relationships of Eddie Antar
Pressure to maintain social status
Pressure to sustain in competitive market
Lack of internal and external controls
Lack of audit trail
Inability of the auditors to judge performance quality
Lack of outsiders’ access to information
Sam Antar, former CFO of Crazy Eddie gave a statement, – “we committed crime simply because we could. Criminologists like to analyze white collar crime in terms of the ‘fraud triangle’ — incentive, opportunity, and rationalization. We had no rationalization. Simply put, the incentive and opportunity was there, but the morality and excuses were lacking. We never had one conversation about morality during the 18 years that the fraud was going on.” This statement shows that there was no rationalization used while committing the fraud, we could assume that following rationalizations could have been used by them:- Whatever they were doing did not hurt anybody else.
Whatever they were doing was not wrong.
Moral justification like, “Everyone else is doing it, so it must not be so bad to do this” could have been used.
4 Massive Frauds You’ve Probably Never Heard Of. (n.d.). Retrieved from http://www.investopedia.com/articles/economics/12/four-unknown-massive-frauds.asp A Convicted Felon Speaks Out about White Collar Crime. (n.d.). Retrieved from http://www.whitecollarfraud.com/947660.html Crazy Eddie – Wikipedia, the free encyclopedia. (n.d.). Retrieved May 6, 2014, from http://en.wikipedia.org/wiki/Crazy_Eddie Crazy Eddie Masterminds [Video file]. (2012, January 7). Retrieved from http://www.youtube.com/watch?v=CP8iO5lvCoU Weirich, T. R., Pearson, T. C., & Churyk, N. T. (2010). Accounting & auditing research: Tools & strategies. Hoboken, NJ: Wiley.
The Case of the Mexican Crazy Quilt
...CASE 5 THE CASE OF THE MEXICAN CRAZY QUILT “The mission of the project which you will head is to get our new Mexican subsidiary company ready for take-over by Mexican managers. My hope is that you will be able to do this in about two years.” explained Robert Linderman, president of the Linderman Industries Inc. to Carl Conway, newly appointed project manager for “Operation Mexicano” Conway had been hired specifically for this assignment because of his experience in managing large defense projects in the aerospace industry. “The first thing that I will have to do is put a project team together.” said Conway. “I imagine that you have in mind my drawing people from the functional divisions.” “Yes I have already sent memoranda to the division managers informing them that you will be asking for some of their key people to work under you for about two years,” said Linderman. “In addition, I have advised them to be prepared to process work orders from Operation Mexicano with the personnel and equipment of their organizations. Later on in the project’s life, you will begin to get Mexican personnel both managers and technicians, into your organization. These people will have Mexican supervisors, but until the mission is accomplished they will also have to report to you. I will have to admit that you are going to have some complex authority relationships, especially as you personally will be responsible to the president of the subsidiary, Felix Delgado, as well as to me.” Conway......
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...72 | Inventory Turnover | 3.23 | 4.38 | 5.14 | 5.88 | Shown above are some of the key ratios for Crazy Eddie during the period 1984-1987. Some of the red flags these ratios reveal include the steady decline of inventory turnover rates from 1984-1987 which could indicate lost sales, excess inventory, or ineffective buying. Another red flag is the accounts receivable turnover figures. The drop from 116.78 in 1986 to 32.5 in 1987 is most likely a result of the poor credit policies Crazy Eddie had in place for its customers. 2.) Several audit procedures could have led to the detection of some of the accounting irregularities involved in the financial statements of Crazy Eddie. For (a) the falsification of inventory count sheets, the auditors could have visited more than one site of a Crazy Eddie store and performed full physical counts of inventory that didn’t allow Eddie Antar to stock up one location with inventory which he knew would be audited. Also, the auditors could have checked the inventory that was in place with the amounts on the inventory sheets and obtain proper documentation from vendors and confirming with them the proper inventory that was ordered. With regards to (b) the bogus debit memos for accounts payable, the auditors could have confirmed notes payables with banks and creditors that they have received payment or are expecting payment from Crazy Eddie, and trace those numbers with amounts in the general ledger for accounts payable. For (c) the......
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The Case of the Mexican Crazy Quilt
...placing ads in magazines, newspapers, on radio, television or billboards. One-time * Some marketing activities will only need to be used on an as-needed basis. Often, this means you will only delve into the activity once. Examples of a one-time marketing activity are new product creation and implementation, starting a referral program, writing a book, creating a new website, a seminar, webinar or other one-time promotion. Idea Generation * Idea generation marketing activities are those which precipitate new ideas and concepts that can be used in your business. These include brainstorming by yourself or with team members, initiating joint ventures, visualization exercises, networking or visiting trade shows. Another method is to study your competitors for ideas that you can use and improve upon in your own business....
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............2 Analysis and Law.........................................................................................5 Conclusion/ Recommendations…………………………………….………9 Issues 1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm possess a higher-than-normal level of audit risk. 2. Identify specific audit procedures that might have led to the detection of the following accounting irregularities perpetrated by Crazy Eddie personnel: (a) the falsification of inventory count sheets, (b) the bogus debit memos for accounts payable, (c) the recording of transshipping transactions as retail sales, and (d) the inclusion of consigned merchandise in year-end inventory. 3. The retail consumer electronics industry was undergoing rapid and dramatic changes during 1980s. Discuss how changes in an audit client’s industry should affect audit planning decisions. Relate this discussion to Crazy Eddie. 4. Explain what is implied by the term lowballing in an audit context. How can this practice potentially affect the quality of independent audit services? 5. Assume that you were a member of Crazy Eddie audit team in 1986. You were assigned to test the client’s year year-end inventory cutoff procedures. You selected 30 invoices entered in the accounting records near year-end: 15 in the few days prior to the client’s fiscal year-end and 15......
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Eddie Bauer Case Study
...Eddie Bauer Eddie Bauer started off as a sporting goods store with high quality materials. They focused on a market that enjoyed outdoor living; fishing, hunting, hiking ect…, but respected the quality of a higher end product. That has still carried forward to today with a complete expansion of their product line. (Company Info, 2014) When considering opening a new store Eddie Bauer needs to take into consideration of who is buying their product line. Their main target market should be men and women ages 30 to 54, they will need a higher income being that the products are in the price range of $50 plus. A middle class to upper middle class demographic would be best with household incomes of $50,000 or more. With the slogan “Live Your Adventure”, Eddie Bauer is targeting the active and adventurous consumer who travels and explores the outdoors. The consumers are looking to purchase tough gear and clothing that can withstand many types of weather and terrain. They are also looking for comfortable yet fashionable clothes that reflect who they are while keeping them climate friendly. This is a higher end cliental who keeps up with the latest technology and trends. They would buy higher end cars such as Ranger Rover or Volkswagen, a vehicle that is nice but can also handle weather and unstable conditions. They go on skiing vacations and hiking trips, and have the opportunity to take leisure time out of their busy work schedule. Eddie Bauer should look for this type of......
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The Case of the Mexican Crazy Quilt
...copyright material by someone other than the copyright holder at a fixed fee. D) It permits certain limited use of a copyright by someone other than the copyright holder without the permission of the copyright holder. E) It permits certain unlimited use of a copyright by someone other than the copyright holder without the permission of the copyright holder. Points Earned: | 2.0/2.0 | | Correct Answer(s): | D | 18. Non-patented inventions that have been in public use for over a year can still be patented A) True B) False Points Earned: | 0.0/2.0 | | Correct Answer(s): | False | 19. Apart from recovering damages, and recovering profits made by the offender, successful plaintiffs in a misappropriation of a trade secret case can also ________. A) obtain an injunction prohibiting the offender from divulging the trade secret B) ask for transfer of any of the offender's patents to the plaintiff C) obtain the offender's trademarks or brand name as payoff D) ask to acquire the offender's trade secrets as payoff E) None of the above Points Earned: | 2.0/2.0 | | Correct Answer(s): | A | 20. Which of the following is a key function of the U.S. Court of Appeals for the Federal Circuit with regards to patents? A) It hears appeals rejected from state courts regarding patent issues B) It accepts applications for new patents C) It helps to promote uniformity in patent laws. D) It helps to enact new patent laws. E) All of the above Points Earned: | 0...
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The Crazy Crook: a Study of Criminality and Insanity
...In the 19th century and early in the 20th , when people had unknown illnesses, they were often believed to be “possessed”. One such case is re-enacted in the film The Exorcism of Emily Rose (2006). The film centres a round a court case which ensued after a girl, who had a known mental disorder (epilepsy). Her priest advised her to stop taking her medicine, ultimately resulting in her death. To decide whether someone is morally insane is still left up to each person’s moral values, although the media have very prejudiced views on what is considered abnormal moral behaviour. The legally insane are people who are unfit to stand trial or were unable to comprehend their actions while committing a crime. Journalists tend to crucify those who are acquitted on the basis of insanity, which leads to public outrage, as the public wants to see someone paying for what they did. From watching movies and televsion series on this matter, one gets the feeling that a sure way to get acquitted from committing a crime is to be found legally insane. This however is not true and less than 1% of defendants who plea not guilty due to insanity are successful (Simon & Shackelford 1991). This plea is discussed extensively in the media influences the public’s perception of the legal and justice systems. It is interesting to note that in an American study on court cases involving insanity, both psychiatrists and lawyers believed there is a strong link between criminality and insanity. When asked to......
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Eddie Bauer Case
...CASE 5-3 Eddie Bauer: Strategize with Secondary Marketing Data 1 - What demographic and geographic information should Eddie Bauer collect to select store locations? 1. What demographic and geographic information should Eddie Bauer collect to select store locations? The demographics which the firm needs to collect will be the financial stability of the customers which have been living near the stores or the prospective sites. They need to have data on their employment and the type of employment. The annual salary figures along with the time of bonuses will help the firm to develop its offering strategies. The tastes and the preferences can be analyzed from the cultural mapping of the sites which will help the firm to understand the type of products which will attract the customers the most. The recent buys will help the store to understand the type of products and the price range which has been triggered the buys. This information will help to understand the various aspect of the consumer buying behavior. The geographic information required will be the location of the various public places which are near the sites, they can be the universities and also the shopping plazas. The locational advantage can be derived by setting up the store in a posh neighborhood which will help in the sales of the international brands. The location of nearby offices will also help in the sales. The network of roads need to be understood as more traffic will also mean the lack of parking......
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Crazy Eddie Case
...I believe that Daniels is responsible for reporting the error to Peter. From the ethical reasoning perspective, I would attempt to identify the harms and benefits of whether informing my superior about potential error versus not informing them. The consequences of not reporting his mistake to Peter in projecting sales would be severe, not only for Daniels but also for entire Lynchberg Manufacturing. First, if the demand does not increase beyond the projected level later, Daniel would lose his job, and both Daniels and the company are going to involve themselves in a possible lawsuit. Besides that, regulators might investigate the failure of preparing an effective budget which probably lead to declines in net income. More important, both Daniel and the company are taking the risk of losing their reputations, which would cause the investors and creditors to lose the confidence in Lynchberg Manufacturing thus significantly affect its financing capability. Also, other stakeholders affected by his silence include employees in the accounting department who might underestimate the cost of each product, the management who might make unreasonable business decisions, suppliers who might face a dramatic sales return in raw material, and creditors who figure out the inaccurate debt repayment ratio. The primary benefit for Daniels is the acceptance from his boss and his job security in the short run. On the contrary, the consequence of reporting his mistake to Peter would cause......
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Case 1.8 Crazy Eddie
...Crazy Eddie, Inc. Question 1 Key ratios and other financial measures: |Pro Forma Balance Sheet Ratio |1984 |1985 |1986 |1987 | | |Account Receivable |7.12% |4.18% |1.77% |3.68% | | |Merchandise Inventories |63.83% |40.51% |47.16% |36.99% | | |Account Payable |54.98% |35.22% |40.74% |16.96% | | |Accrued Expenses |16.62% |13.33% |13.49% |1.90% | | | | | | | | |Pro Forma Income Statement Ratio |1984 |1985 |1986 |1987 | | |Cost of Good Sold |77.89% |75.87% |74.11% |77.23% | | | | | | | | | |Liquidity & Activity Ratios |1984 |1985 |1986 |1987 | | |Current |0.93 |1.56 |1.40 |2.41 | ...
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...Crazy Eddie The major schemes involved were the overstatement of inventory and the understatement of accounts payable. The overstatement of inventory was accomplished by preparing inventory count sheet for items that did not exist. In order to fix a drop in same-store sales Antar would record transshipping transactions as retail sales of individual sales. This meant that inventory would not be credited for the total number actually sold. It would inflate selected operating units in addition to overstating the entire inventory available. In addition, the company included consigned merchandise and goods being returned to suppliers in its inventory. The understatement of accounts payable was accomplished by preparing faux debit memos from vendors that were entered into the company’s accounting records. The red flags of this fraud included the tight circle of relative that ran the company, the fact that Crazy Eddie’s accountants were former employees of the external auditors, unqualified and inexperienced accounting and finance personal, intolerance to switch to an electronic inventory system, missing documentation and the continuation of impressive figures despite the leveling of the electronic boom. As for inventory the auditors should have been concerned with existence, and rights and obligations. The existence should have been tested by picking a random selection of inventory from a detailed list of the inventory stated in the financial statements. This selection of......
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Case 1.8 Crazy Eddie
...Bivariate Analysis in SPSS: The Correlation Coefficient (Textbook Resources: Norusis, pages 431-432 and 486-488) Please use the data file, Customer_Survey_Modified, for the following examples. I. An Overview of the Correlation Coefficient • measure of the co-variation or degree of association between two variables (Are two variables related to one another and, if so, what is the direction and strength of this relationship?) • can be calculated for interval and ratio variables only. II. Calculating the Correlation Coefficient in SPSS Analyze → Correlate → Bivariate • In the “Variables” box place the two variables that you are analyzing. • Select Pearson under “Correlation Coefficient” • Make sure that “flag significant correlations” is also checked. The SPSS output is in the form of a correlation matrix. The numbers in the upper right and lower left hand boxes report the results of the test of the following null and alternative hypotheses: H0: r = 0 H1: r ( 0 Where r is the correlation coefficient The values of r range from -1 to +1: • If r = 1 then there is a perfect positive relationship between X and Y. • If r = -1 then there is a perfect negative relationship between X and Y. • If r = 0 then X and Y are not related. • The sign determines the direction of the relationship while the magnitude of r......
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Eddie Bawer Case
...Executive Summary: In 1999 Eddie Bauer was a $2 billion apparel retailer, making 25% of its income from its catalog process and the rest from its 600 stores. Eddie Bauer operated in the textile clothing industry in the United States, Canada, Japan, UK and Germany. The company sold casual and office wear clothing to men and women. Moreover, they also had eyewear, bicycles, furniture and home furnishings. They marketed their products in three segments, retail stores, catalogs and Internet websites. Eddie Bauer had 555 retail stores located in the United States. They produced and distributed over 4 million catalogs annually. Eddie Bauer had a large threat of rivals because there were such vast arrays of clothing stores that sell active wear. Eddie Bauer had close competitors such as GAP, Abercrombie & Fitch, Victoria’s Secret, Lands’ End and L.L. Bean being the top five (see Exhibit 2). Their top competitors were not closely related to them when it comes to the number actual retail store locations, but they offered relatively the same catalog and online services. In 1998, there was a 5% decline in same-store sales and bigger decline in profits. Eddie Bauer’s marketing strategy is promoting the concept of Synergy: “One Brand, One Voice, One Customer” to their products line men’s and women’s under the Eddie Bauer name, office wear as AKA Eddie Bauer, and furniture and furnishings as Eddie Bauer Home through Retail, Catalog, and I-media Channels. The Goal is to modify the......
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Case Study- Crazy Eddie
...Case Study: CRAZY EDDIE 1-6 1. Key Ratios: 1987, 1986, 1985, 1984 Liquidity Ratios: Current Ratio: 2.4062, 1.3985, 1.5626, 0.9287 Quick Ratio: 1.4044, 0.5982, 0.7680, 0.1499 Solvency Ratios: Debt to Assets Ratio 0.6837 0.6643 0.6359 0.8298 Times Interest Earned 3.6169 30.3927 28.2877 14.9253 Long-Term Debt to Equity 2.1617 1.9786 1.7462 4.8755 Activity Ratios: Accounts Receivable Turnover 32.5026, 116.7711 49.7515, 52.7208 Inventory Turnover Ratio: 4.98, 3.55, 1.89, 1.95 Looking at the key ratios during that period there were a lot of red flags. The audit risk for Crazy Eddie would be very high. Some of the major red flags were inventory turnover in 4 years went from 4.98 to 1.95. That shows that some of the accounting was incorrect. Some of the other red flags are the amount of accounts receivable. 2. a. Visit the actual store without telling them and check the inventory in place to compare with the false amounts on the inventory count sheets. b. Contact different vendors, creditors and supplies to verify they received payment from Crazy Eddie. Also confirm with the banks and creditors about the notes payable account then trace that information to the general ledger. c. Observe the recorded sales from authorized shipping and approve the customer orders and monthly statements to customers. You have to also make sure there is a separation of duties between handling the cash and reconciling the bank accounts. Therefore the same person is not doing......
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The Case of the Mexican Crazy Quilt
...THE CASE OF THE MEXICAN CRAZY QUILT I. Introduction The term "crazy quilting" is often used to refer to the textile art of crazy patchwork and is sometimes used interchangeably with that term. Crazy quilting does not actually refer to a specific kind of quilting (the needlework which binds two or more layers of fabric together), but a specific kind of patchwork. Crazy quilts rarely have the internal layer of batting that is part of what defines quilting as a textile technique. Regular patchwork combines the pieces of fabric into a predetermined and regular design, but crazy patchwork uses irregular pieces of fabric on a foundation fabric or paper. This may create haphazard-looking and asymmetrical designs, or the designer may use some control in placement. Patches can be hand appliquéd onto a base fabric. This method gives the most variety as every patch is unique. There are also block patterns designed for crazy quilt that can be sewn by machine. Sometimes part of a crazy quilt is haphazard while other parts are placed in a planned pattern. A common example of this the placement of patches is a fan pattern. The patches and seams are then usually heavily embellished. II. Facts of the Case 1. Carl Conway was hired as Project Manager by Robert Linderman, President of Linderman Industries, Inc. to handle the “Operation Mexicano” project for a Mexican subsidiary company before take-over by Mexican Managers. 2. He was tasked to complete the Operation Mexicano......
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