Free Essay

Audting Case 2 Cardillo Travel Systems

In: Business and Management

Submitted By Zjohnson1118
Words 412
Pages 2
Zach Johnson
Case 2- Cardillo Travel Systems

1.) Russel Smith and Helen Shepard faced ethical dilemmas when dealing with the Cardillo Case because they were being pressured to sign off on the transaction between them and United Airlines that was misrepresented as revenue. The SEC, IRS, stockholders, United Airlines, and financial analysts would have been affected by this misappropriation of revenue. Smith owed the responsibility of good faith to all of these stakeholders because he knew what was right and the company executives pressured him into possibly altering the financial statements in Cardillo’s favor. Shepard had the responsibility to verify that the contractual agreement indeed allowed Cardillo to recognize the revenue in the 2nd quarter, but after further investigation this was not the case. Cardillo executives lied to Shepard which was very unethical, and since she caught this, Cardillo dropped Touche as their audit client. Shepard maintained independence and did what was morally correct and also correct by reporting the disagreement to the SEC. 2.) They should verify that all the numbers in the account match up to what is being portrayed on the financial statements. After that they should check each transaction in the account and question the transaction, which Shepard did correctly. She had suspicion and she took the correct path to determining the proper amount. The auditors should have immediately notified Shepard of any suspicious transactions and allow her to be the final say on what to do. 3.) There was evidence stated that the amount was refundable under certain conditions and thus not recognizable immediately as revenue. The disputed amount was refundable through 1990 if certain stipulations of the contractual agreement were not met. She needs to recall what is the proper amount of revenue that can be reported under the conditions under the contractual agreement. 4.) The principal objective is to let the SEC know of any disagreements regarding accounting, audit, or financial statement standards. I do not believe she violated client confidentiality because she was asked by the SEC to disclose any information regarding material amounts that would affect financial statements. She should have notified Cardillo executives, but once again, they were unethical to the SEC when stating that they dropped Touche Ross for no apparent reason when really Touche was calling them out. 5.) Yes, I believe as an auditor, they should require auditors to evaluate key executives integrity. They could ask around a potential firm or conduct interviews with ethical questions and tests.…...

Similar Documents

Premium Essay

Case 2

...ACTG 351 Anne Surrey Investments Case Due: Wednesday, May 29 (at the beginning of class). Also, please be prepared to discuss the case and your solution in class on this date. Refer to the current, relevant accounting guidance to answer the questions on page 3 of the case. Required: Please be sure to reference the applicable professional guidance listed below. Your discussion should be typed, double-spaced and no more than 3 pages in length. Please prepare your case discussion in memo form (to Jim Beatty) addressing each of the questions. Applicable Professional Pronouncements:   ASC 320-10-35: Investments – Debt and Equity Securities SAB 111: Instructions for accessing the FASB Codification database: 1. Go to 2. User ID: AAA52999 3. Password: Fgkb9em 4. Click on link to FASB Accounting Standards Codification (from American Accounting Association webpage) 5. Search on 320-10-35 (or access via topical drop down menu) 1 Jim Beatty is the CFO of Anne Surrey Inc., an investment company that primarily invests in common stocks of both public and private companies. Anne Surrey categorizes these investments as available-for-sale. At the end of fiscal year 2010, Jim is trying to determine whether some of the investments in the public stocks that Anne Surrey owns are other-thantemporarily impaired. On an aggregate basis, the company’s equity investments are in a net unrealized gain......

Words: 882 - Pages: 4

Premium Essay

Cardillo Travel Systems, Inc

...Alia Ejaz Khan Acc 723 Case 5.1 Cardillo Travel Systems Inc. 1. Three accountants faced an ethical problem. One account, Russell Smith was the controller for Cardillo, the other two accountants were engagement partners named Helen Shepherd and Roger Shlonsky. The two engagement partners had an issue of whether they should accept the insufficient explanation agreed for a highly suspicious transaction or should they risk losing the client by simply inquiring and asking for more details about the transaction or ask them to fix that transaction. On the other hand, Russell smith had to handle an issue of losing his job because he refused to cooperate with Rognlien or go against all his ethical responsibilities and principles towards his profession. People who were mainly affected by the outcome of such issues were the stockholders and creditors of Cardillo along with the three accountants mentioned above. These accountants had a personal liability and accountability to the stockholders and creditors of the company. They are very dependent on the financial data of the company which help them to make their decisions such as investing in the company and etc. Also, part of their responsibilities was to guide them to the right pathway towards executives of the company who were the ones influencing the accountants. Moreover, part of their responsibility towards their work as well as their coworkers is to always maintain a professional relationship consisting of dignity and......

Words: 878 - Pages: 4

Free Essay

Case Paper 2

...Singhquaverton Maden COSC 3325 4/5/13 Jie Arrendell Case 2: Raymond James Financial, BCD Travel, Houston Texans, and Others: Worrying about What Goes Out, Not What Comes In I think the reason why employees don't realize the dangers is because the events which are less sensitive to the management of the company's employees are not important in regulating confidentiality of data and information systems. As we can see from the case there are several examples of the proposed event where there's less rigorous regulation in the supervision of information systems within the company. Most of the issues described in the case are simple little issues such as emailing customer credit card numbers and such but I would have definitely have seen these issues but the lapse of these company have cost them security wise. The best way for organizations to strike the right balance between monitoring and invading their employees' privacy would be to evaluate each employees based on their activities. Have each employee make a report of their activities while the company is monitoring them as well the companies should put trust in their employees to report everything they're doing and when it is time to evaluate them cross compare what has been monitored and what the employees have reported. The consequence biased to one side would be if the company were to engage in just invading employee privacy there could be massive repercussions such as the company being sued etc...

Words: 343 - Pages: 2

Free Essay

Mis Case #2

...Hospitality Management Assignment Case Study #2 Presented in Partial Fulfilment Of the Requirements for the Course MGMT485 Management Information Systems by Iwassane Burton 11090193 January 28, 2014. 1. One consulting firm has predicted that video and web conferencing will make business travel extinct. Do you agree? Why or why not? A videoconference allows individuals at two or more locations to communicate simultaneously through two-way video and audio transmissions, and web conferencing refers to a service that allows conferencing events to be shared with remote locations. I do agree that these two tools will lead to the extinction of business travels. My reason for agreeing with this is because of the economic benefits that are made possible by this technology. One of the best things a firm can achieve is to reduce cost, and video conferencing definitely does this since it allows them to avoid costs associated with business travels. Another reason for my agreement is the fact that videoconferencing is now growing at an annual rate of 30%, thus if it continues to grow like this then it will soon take over. 2. What is the distinction between videoconferencing and telepresence? Videoconferencing is an online tool that allows individuals at two or more locations to communicate simultaneously through two-way and audio transmissions. Telepresence is a leading-edge-high-end videoconferencing system which integrates the audio and visual......

Words: 690 - Pages: 3

Premium Essay

Case #2 Mr. Wada wants to use the start of the new fiscal year (May 1) to initiate a more formal forecasting system. He has decided to focus on the two main bearing products which comprise 90% of their revenue. With no existing expertise in demand forecasting he has turned to a small consulting firm to recommend appropriate forecasting techniques, prepare a forecast for the next four months, and provide advice and training to an identified NCC employee in the Operations organization. Ms Ronnie Havens has exhibited an interest in statistical applications and has taken some courses in college which will serve as a foundation for taking on this new responsibility. Mr. Wada has also asked other staff members to assist in developing the forecasts. Mr. Jonathan Nguyen, Vice President of Marketing, has been able to provide external sales demand for the two products for the past fifteen months and has also supplied historical data for products used for demonstration and promotional purposes (see Table 1 below). Mr. Chris Jimenez, Vice President of Operations has established data for internal use of the two products in Quality, Product Development, and Maintenance Departments (see Table 2 below). As the consultant assigned to this project you are expected to perform the following tasks: 1. Identify potential demand forecasting techniques for the two products, 2. Recommend the most appropriate technique for each product, 3. Develop a monthly demand forecast......

Words: 1295 - Pages: 6

Premium Essay

Unique Travel Case

...elsewhere in this volume, are corporate ethics (which formally state the company's values) and corporate image (which is the public perception of the corporate culture). Corporate Culture it is classified in: Segmentalist Culture and Integrative Culture Unique Travel Agency works as Segmentalist Culture. Unique Travel corporate culture it’s a segmentalist culture according to Kanter theory of segmentalist and integrative cultures. Why we decided that they work as Segmentalist Culture? For example it says;'' Therefore Peter, Anna and Thomas decided to hold a one day meeting outside the company to discuss the situation.'' in the 'Challenges' part. Because they also avoids confronting problems like in segmentalist culture's feature.(4th feature of Segmentalist Culture) Also has week coordination mechanism between departmants.And this one is also feature of Segmentalist Culture. Segmentalist Culture * Views organizational problems narrowly * Locates problems and hence responsibilities narrowly within department’s or individual’s one another * Shuns experimentation * Avoids confronting problems and conflicts * Has a weak coordinating mechanism * Emphasizes precedent, procedures and systems * Inward-looking Integrative Culture * Sees problems as related\ * Views problems and responsibilities as shared and connected * Has matrix or team/project-based structure * Innovates and test assumptions : invites experimentation *......

Words: 619 - Pages: 3

Premium Essay

Case Study 2: Collaboration Systems at Isuzu Australia Limited

...Case Study 2: Collaboration Systems at Isuzu Australia Limited Strayer University CIS109 Matthew Gonzalez Due Date February, 23 2015 Isuzu Australia Limited or IAL is a subsidiary of Isuzu Motors Limited in Japan and are responsible for all things Isuzu Trucks in Australia. The company needed a way to connect their entire dealer network and improve the speed and accuracy of their communications between headquarters and each dealer and other business partners The Need for a new system. Why did they need to update their system and how would they accomplish this in a timely and efficiently manor The reasoning behind getting this communication network up and running is the high priority requirement for access to the latest materials and information from IAL head office (Bigdoli, 2014). In 2005 they distributed all information in printed format and shipped via the Australia Post. The benefits to creating a centralized communication network would be exponential to their productivity, dealers and other business partners would be able to access information and submit issues in real time instead of relying on post. IAL decided to use IBM’s WebSphere portal and Workplace Web Content Management (WCM), along with Lotus Same Time instant messaging, Lotus Quickr for team based project management and Portal Document Manager (PDM) for a central repository of documents. The reasoning behind this was given by the Staff Operations Manager...

Words: 777 - Pages: 4

Premium Essay

Adobe Systems Case Discussion

... Adobe Systems SYSM6332- summer 2015 Discussion Case 1 David Reboredo Daniel Torres Background: * Adobe Systems was founded in 1982 by John Warnock and Charles Geschke. Initially the company was operating only in the graphics and publishing market. First they introduced PostScript as a desktop publishing application, followed by Illustrator, Photoshop and InDesign, all of which turned out to be exceptionally successful. The next step was introducing Acrobat and the PDF document format, which also quickly became an industry standard. * In the subsequent years Adobe added to its product mix successful products like PageMaker, After Effects and GoLive by acquisition. Despite all these achievements, the company experienced substantial difficulties during 1998. Important product delivery date was missed, sales declined and the stock price plummeted encouraging a takeover attempt by one of their direct competitors, Quark, Inc. * Bruce Chizen, who was appointed as a CEO later in 2000, managed to stabilize the situation. This was not an easy task, as most of Adobe's executive management left the company while he had to lead a drastic restructuring of the business. Adobe had to carry out a major reform in order to be more profitable. Case Overview: * This case describes the early success Adobe had establishing Postscript as the preferred software application for printing documents. The case describes the strategy Adobe set in motion to secure script position as......

Words: 1807 - Pages: 8

Premium Essay

Chapter 2 in Information System

...Chapter 2 Global E-business and Collaboration Management Information Systems Chapter 2: Global E-business and Collaboration Learning Objectives • What are business processes? How are they related to information systems? • How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance? • Why are systems for collaboration and social business so important and what technologies do they use? • What is the role of the information systems function in a business? 2.2 Copyright © 2016 Pearson Education, Inc. Management Information Systems Chapter 2: Global E-business and Collaboration Business Processes and Information Systems • Business processes: – Flows of material, information, knowledge – Sets of activities, steps – May be tied to functional area or be crossfunctional • Businesses: Can be seen as collection of business processes • Business processes may be assets or liabilities 2.3 Copyright © 2016 Pearson Education, Inc. Management Information Systems Chapter 2: Global E-business and Collaboration Business Processes and Information Systems • Examples of functional business processes – Manufacturing and production • Assembling the product • checking the product for quality – Sales and marketing • Identifying customers • selling the product – Finance and accounting • Creating financial statements • paying creditors –......

Words: 2464 - Pages: 10

Premium Essay

Case 2

...------------------------------------------------- CASE 2-1 BMW Taps the Emerging Chinese Luxury Markets ------------------------------------------------- MAR 4503 Consumer Behavior FIU JEREMIAS CUADRA, CHARLES KETTEL Abstract BMW is one the largest automobile industries in the word, when you think of BMW you can surely say it's a high quality luxury car. The focus is to re-position itself in a new market. Which is the Chinese luxury market. How does a powerful company like BMW get ahead start in this un-tapped market with so much potential for growth? Leading to more global exposure and also more revenues. (JEREMIAS CUADRA) Q1. There is often a natural tendency to assume that in collectivist cultures such that in China, luxury products would not be popular. a. Explain how luxury products such as the BMW automobile might fulfill needs even within the traditional collectivist value set of China. I believe by growing this economy will give Chinese citizens more opportunity and more purchasing power to one-day own a luxury vehicle. Also social status is something that can represents that you’re doing well. I also believe it can lead to a showing off culture. b. Explain other factors that might be driving the desire for luxury in China. Well we all want what we can’t have, I believe that's human nature, but in China I other factors could play a role such as advanced luxury shopping experiences. More options would be available theirs a perfect gift for......

Words: 1662 - Pages: 7

Premium Essay

Case 2 see in this case and how do they work out strategically? 1. CUBS thought of merging the different divisions of the bank’s operations together. A division such as Marketing and Sales would remain separated from the other divisions in order to focus on the specific markets in which they operate. The Operations division however would be combined as one large supplier of service. This trade-off considers two objectives: Cost (economies of scale) and the general performance of the (merged) Operations division. If you were to implement this decision, the costs would be reduced by 3-5 cents, which is very significant given the profits of a little less than 10 cents. In contrast, CUBS would lose the benefits of decentralised Operations units if they were to implement this decision. For example, a decentralised division is better at making specific decisions for the market in which it operates. A centralised operations division (one unit) means that the all the decisions would be more general, which means CUBS is less able to generate market specific benefits if they decide to implement this change. Concluding it can be said that In this trade-off it is ultimately about the balance between costs and the general performance of Operations. 2. CUBS considered purchasing a service where computers would be installed in the showrooms of the retailers. Using this tool, a salesperson would be able to simultaneously enter customer details and links in their own system. This......

Words: 480 - Pages: 2

Premium Essay

Cardillo Travel

...Cardillo Travel Systems Jennifer Aponte Professor Bunney Schmidt ACC 562 May 24, 2015 Week 7 assignment Fraud is a major problem for organizations all over as it involves theft and fraudulent financial statements. As the number of individuals involved increases, fraud expands and worsen within a company since there are more people supporting the wrong acts instead of doing what is right. Cardillo Travel Systems was the largest company in the travel agency industry in the 1980’s where it was first listed on the national stock exchange. The CEO of the company was a businessman from Los Angeles, CA named Walter Rognlien and his wife, Esther Lawrence was the President and Chief Operating Officer. These individuals were mainly concerned with doing whatever needed to get done to ensure that the entity’s financial records reflect successful information. As the top executive of Cardillo, Rognlien pressured and manipulated the controller of the company, accountants and 2 partners of public accounting firms. He wanted to conceal the actual nature of a fraudulent entry in the organization’s accounting records which ended up being unsuccessful. Luckily, not all of his employees obeyed his requests to cheat the system and the Touche Ross, the auditing firm hired by Cardillo was very careful to identify the fraudulent activity and Rognlien did not get too far with his scheme. The SEC was eventually notified and Cardillo Travel Systems eventually collapsed in 1986 and the company......

Words: 1924 - Pages: 8

Premium Essay


...the valuation assertion for investments in marketable securities are these: • The securities are initially recorded at cost and are thereafter valued at market. • Cost includes all costs, including brokerage fees, to purchase the securities. 7-2. 7-3. 7-1 • • • • Market is: o Defined as aggregate market value determined either by classes of securities or treating all securities as one class. o Measured by year-end market prices, assuming a liquid market such that sales of the securities would not have a major impact on market value. All gains/losses due to sales during the current period are properly reflected in the accounts. Carrying values of marketable securities sold are removed. All adjustments required for the unrealized adjustments to market value are properly recognized. 7-5 The basic characteristics that distinguish the reliability of audit evidence are: More reliable information • Directly observable evidence • Evidence derived from well controlled information system • Evidence from independent outside sources • Documented evidence • Original documents Less reliable information • Indirectly observable evidence • Evidence derived from a poorly controlled system or easily overridden information system • Evidence from within the client’s organization • Verbal evidence • Photocopies or facsimiles 7-6. Audit risk and reliability of audit evidence are related. If audit risk is low rather than high, it implies that the auditor has to gather......

Words: 14320 - Pages: 58

Premium Essay

Case 2

...Case 1 1. What are the business benefits of Business Sufficiency, Business Sphere, and Decision Cockpits? The business benefits of Business Sufficiency are that it can tell you about the market share and other performances metrics six to twelve months into the future. It is based on a series of analytic models showing what occurring in business right now, such as, shipment, sales, and market shares why it’s happening and what actions P&G can take. Business Sphere is interactive and can reveal insight, trends, and opportunities for P&G’s leaders and prompt them to ask focused business actions that can be addressed with data on the spot. Thousands of algorithms and analytical models aggregate data, organizing it by country, territory, products line, store level, and other categories, and monitor the trends like response to advertising and consumer consumption within individual regions and countries. This program is only used by upper P&G managers and executives. Decision Cockpits are dashboards that display easy to read charts illustrating business status and trends. It has started to give more employees access to the same common data sources. It’s the same principle as Business Sphere, but is extended across the business. These cockpits feature automated alerts when important events occur. One of the major goals on the cockpit was to eliminate time spent by the employees debating the validity of competing versions of data found in emails, spreadsheets, letters...

Words: 965 - Pages: 4

Premium Essay

Cardillo Travel Systems

...Week 7 Assignment 2: Cardillo Travel Systems, Inc. Jerrod A. Johnson ACC562 Dr. J. Olajide, Instructor February 23, 2014 Explain the Securities and Exchange Commission’s rationale to charge Cardillo with each of the following violations: * Making false representations to outside auditors * Failing to maintain accurate financial records * Failing to file prompt financial reports with the SEC * Violating the insider trading provisions of the federal securities laws Within the mission statement of the U.S. Securities and Exchange Commission it declares that: “… all investors, whether a large institution or private individuals, should have access to certain basic facts about an investment…” Cardillo Travel Systems, Inc., its chairman and chief executive officer A. Walter Rognlien, its president and chief operating officer Esther I. Lawrence and its vice president of finance William Kaye all attempted to defraud auditors and the general public by presenting financial documents that contained misleading information. It is the responsibility of the SEC to protect the investor, whether large or small, from organizations that intentionally misrepresent themselves financially or take advantage of information that the general public is not privy too in order to better their financial situation. This is done so that we can make informed decisions about potential investments and to maintain a fair marketplace. Determine who was in violation or......

Words: 1264 - Pages: 6