Essay: Major Accounting Discrepancies

Sample Essay

This activity later came to be known as the Panama pump and the auditors failed to recognize this discrepancy due to a lack of a sales cutoff test. The company repeatedly inflated value of sales and assets and understated values of liabilities to increase the net worth of the company and make it more attractive to investors but by 1987 the fraud strategy changed again from showing high profits to covering up previous frauds in the company but….

this strategy came too late as the public perception about falsifications in the company and its actual financial position had already started to change. Eventually the share price of Crazy Eddie fell to a level of $10 and the earnings witnessed a decline of 20% in 1987. Eddie Antar and rest of the family members had already sold their shares and withdrawn their funds from the company. The company was eventually taken over by Elias Zinn and Victor Palmieri on November 6, 1987. After the takeover financial analysts working for Zinn reported major accounting discrepancies and a range of cases were filed against Eddie, Sam and other members of the Antar family.

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