Description
Option #1: Company Fraud: An evaluative report
The Portfolio Project Option 1 for ACT450 is a research report that identifies and analyzes a company that has been indicted for fraud. The report also will evaluate the auditor's role in relation to the fraud.
- To conduct your research on the following company:
- Children's Cancer Fund of America
- Your report must describe the issues surrounding the company and any company policies in relationship to the impact those might have on public audits/accounting.
- Provide the following elements in your paper:
- An executive summary identifying the company, the fraud, the affected stakeholders, and the ultimate resolution
- A brief history of the company
- An analysis of the auditor's role in the fraud, including any auditing standards that the auditors did not follow
- Identification of internal controls that were circumvented or lacking and that could have prevented the fraud
- Identification of accounting policies currently in effect that are designed to prevent similar problems from occurring again, or, if no policy exists, a proposal for a solution that would prevent a recurrence.
Your written response paper should be 8-10 pages in length. Type your paper in a Word document and follow APA format, according to CSU-Global Guide to Writing and APA Requirements. Include a title page and reference page. Use four (4) outside academic sources other than the textbook, course materials, or other information provided as part of the course materials.
Explanation & Answer
Attached.
Running Head; COMPANY FRAUD
1
Company Fraud
Name
Institutional Affiliation
COMPANY FRAUD
2
Summary
In 2015, The Federal Trade Commission charged James Reynolds with a civil suit
involving various states. Reynolds was accused by the Federal Trade Commission of donor
deception and squandering of over $ $188 million of funds collected from donors. Originally, the
cancer fund was started as a non-profit organization, the Cancer Fund of America (CFA), but
after a few years Reynolds expanded to include the Breast Cancer Society (BCS), Children’s
Cancer Fund of America (CCFOA) and the Cancer Support Services (CSS). According to the
990s of the four agencies, they recorded that a significant portion of the donations received were
spent on lavish expenses, salaries, fundraising donations and bonuses. It was later found out that
they had misused the funds as they only 3% of the total revenue had been spent on programs
related to assisting cancer patients. Additionally, the board and staff members of these charities
were under the management of the friends and family of Reynolds. This is case is a vivid
illustration of abuse and misuse of corporate form for nonprofit organizations, lack of ethical
governance, poor leadership policies at the organizational level, as well as inability to practice
proper regulatory oversight.
COMPANY FRAUD
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Introduction
The Children’s Cancer fund of America is a charitable organization that provides
financial support and assistance to families of children diagnosed with cancer. Financial concern
is one of the major reasons for stress that results from cancer diagnosis. Most people do not
anticipate for Cancer’s financial burden. Parents of children suffering from cancer will
experience intensive income loss due to various expenses such as medical and personal issues.
They will also be subjected to a dramatic decrease in travel and food due to the trauma and
expenses. A significant amount of money amounting to $ 200 million was donated to cancer
charities with the aim of helping the children diagnosed with cancer together with their families.
Unfortunately, this money was squandered and enjoyed by the wrong group of individuals in
charge of these groups, this is considered as one of the most significant charity fraud cases by
government officials (Chwastiak 2013).
The Children’s cancer fund was originally created by James Reynolds in 1987. The
District of Columbia and the Federal Trade Commission launched a complaint that the enterprise
was expanded to become four individual groups and later his church members, friends and his
son joined him. The Federal Trade Commission launched a complaint in 2015 that the four
cancer groups were a hoax, the organizations were charged with misuse of millions and donor
deception, including spending unnecessarily on college tuition and car washing charges, for a
period of close to five years. The previous track record of Reynolds showed that he had severally
been involved in unethical actions hence this case was not a surpris...
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