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Koss Analysis

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In the case of Koss Corporation vs. Sachdeva and Grant Thornton, Koss Corporation, the plaintiff, alleges Sacheva, its former Vice President of Finance, committed fraud and embezzlement of company assets and Grant Thornton failed to properly conduct its audits and failed to disclose numerous accounting irregularities at Koss.

Plaintiff Koss is a publicly traded company listed on the NASDAQ with its principal place of business in Milwaukee and Wisconsin. Currently, Koss mainly designs, manufactures and markets high-fidelity headphone products all over the world. Defendant SujataSachdeva was employed as former Vice President of Finance and was responsible for the day-to day operation of the company’s accounting department and accounting operations. As an officer of the company, Sachdeva was entrusted with numerous important fiduciary duties. However, she took advantage of her position to embezzle Koss’s assets of over thirty million dollars to cover her personal expense. Defendant Grand Thornton is one of the largest accounting firms in the United States. It was hired to serve as an independent auditor for Koss during fiscal year 2004 through 2008. However, Grand Thornton was sued into court because it failed in its fiduciary role by issuing false audit opinions during this period. The negligence, carelessness and reckless auditing behavior caused that the scheme of Sachdeva wasn’t uncovered for a long time.
Before March, 2004, PWC played the role of main auditor of Koss Corporation. According to the information disclosed by the proxy statement during the fiscal year 2004, Grant Thornton was compensated $23970, and took over to serve...

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