This website uses cookies to ensure you have the best experience. Learn more

Bankruptcy Essay

1260 words - 6 pages

Bankruptcy Examiner’s Report in Auditor Malpractice Suits
A bankruptcy examiner’s report may provide a roadmap to auditors’ negligence, breach of contract, gross negligence, and / or cooperation to cover up fraud committed by the debtor management. A bankruptcy examiner is appointed by the court to investigate the debtor and the debtor’s estate for the purpose to determine if fraud, dishonesty, misconduct, incompetence, and irregularity by the debtor management has occurred before and during the filing of the bankruptcy. The judge call for an examiner based on a request from the trustee, the creditors, major ...view middle of the document...

Third, the most important element of the investigation is the time span that it covers; most of these investigations extensively cover the period- one to two years- before the bankruptcy filing to understand and interpret the collaborated factors, circumstances, decisions, and transactions that led to the bankruptcy filing. Fourth, the examiner, then, has to answer the investigation main questions about the debtor honesty, solvency, off balance sheet liabilities, fraudulent transfers, adequate disclosure, and most important the concept of going concern. Fifth, in carrying out the responsibility of the investigation, the examiner cross references the findings to the Securities Exchange Commission’s rules and regulations, the Securities Act of 1933, the Securities Exchange Act of 1934, the Foreign Corrupt Act of 1977, Generally Accepted Accounting Principles in US, Generally Accepted Auditing Standards, and the rules and regulations that govern the Bankruptcy Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Considering the law and status of the State of filing are important as well.
Having said that, the examiner’s investigation is not a financial audit, and does not express any opinion about the materiality or the fairness of the presentation of the financial information. The bankruptcy process is for an honest debtor who failed under economic hardship and need protection to reorganize; the investigation is to provide evidence to that concept.
The examiner’s report contains and composes of several elements. One element is the statement of independency. The second is the composition of the examiner team and their qualifications and credentials including the examiner him or herself. The others elements varies from one examination to the other depending on the debtor case. However, most of the examination report includes an introduction section that reflects summary of the matter under investigation, scope of the investigation, and summary of the conclusion. The second section defines the process of the investigation by establishing the scope of the investigation, factors that influences the investigation, and the procedures aspects of the investigation. The third section reflects the business history of the debtor under investigation and its affiliates. The section traces, identifies, and verifies all financial transactions that include loans, bonds, issuing common stocks, transfers, distributions, sales, purchasing assets and / or liabilities. In a separate section about the role of professionals – auditors, tax accountant, and the corporate counsel-, the report defines the nature of the...

Other Papers Like Bankruptcy

Corporte Finace Essay

3441 words - 14 pages Financial Leverage And Capital Structure Policy 0 Chapter Outline       The Capital Structure Question The Effect of Financial Leverage Capital Structure and the Cost of Equity Capital M&M Propositions I and II with Corporate Taxes Bankruptcy Costs Optimal Capital Structure 1 Capital Restructuring  We are going to look at how changes in capital structure affect the value of the firm, all else equal  Capital

Kelly Services Essay

595 words - 3 pages associated with this debt structure is the risk of default. When a company is near bankruptcy debt-holders have priority claim on the assets over the equity holders. Due to this risk, shareholder’s required rate of return increases. At low levels of debt, equity holder’s expected rate of return increases as a company increases their debt level, while debt-holders expected rate of return remains constant. When a company reaches excessive amounts

Funding For Andy

1040 words - 5 pages determining taxable income of the company and hence it can increase the wealth of the shareholders by giving tax benefits. (b) No voting rights: The debenture holders have no right of voting and hence they are not entitled to interfere in the business decisions of the company. Following are the disadvantages of debenture financing: (a) Bankruptcy risk: If the interest payment accounts for more than the operating profit of the company then in

Manville Aesbestos Case

4594 words - 19 pages , victims' groups, plaintiffs' attorneys, Trust staff, and other trusts. The development and evolution of the Trust were further affected by a myriad of state and federal laws on, inter alia, trusts, securities regulation, contracts, fiduciary responsibility, bankruptcy, and civil procedure. These often conflicting constituencies and laws were forced into a compromise "peace" during the upheaval of the Johns-Manville Corporation' 2 chapter

Good Governance Case Study

369 words - 2 pages result they had encountered trouble about the reimbursement of the petty cash fund. With regard about the profit, they earn smaller amount than they usually receive because there had been a large markup which exceed its cost eight times. Self-centeredness is the major problem experienced in the given case. As for Russ, the majority stockholder, he told no one about the sales thinking that he could have something in case of bankruptcy or

Z Score Analysis

8723 words - 35 pages PREDICTING FINANCIAL DISTRESS OF COMPANIES: REVISITING THE Z-SCORE AND ZETA® MODELS Edward I. Altman* July 2000 *Max L. Heine Professor of Finance, Stern School of Business, New York University. This paper is adapted and updated from E. Altman, “Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy,” Journal of Finance, September 1968; and E. Altman, R. Haldeman and P. Narayanan, “Zeta Analysis: A New Model

Noplat

946 words - 4 pages ultimately result in financial distress causing the company to incur direct and indirect costs of bankruptcy. The costs of financial distress that Loewen experienced are as follows: d. Direct Costs i. Professional services hired to represent the company and creditors ii. Filing fees with the courts e. Indirect Costs iii. Loss of business due to the uncertainty of company sustainability iv

Enron

5885 words - 24 pages What is Enron : Enron was one of the ten largest American company in the late 1990s. It dealt with energy and gas distribution and was based in Houston, Texas. On 2 December, 2001 the company made the largest bankruptcy in America until then (it was only surpassed by those of Worldcom in 2002 and Lehman Brothers in 2008). Before its bankruptcy Enron Corporation gave employment to about 22,000 people and claimed revenues of $101 billion in 2000

Finance Management In Daily Life

483 words - 2 pages situation to occur and probably making you to the way of bankruptcy. Moreover, having finance knowledge help us having a better understanding of the financial issues that arises in our daily life. It can lead us more concern toward the economics situation that happen around, such as the changes of the interest rates, inflation rates, currency exchange and so on. As a result, we are not easily misleading by other people to involve in a bad investment

The Courts In Our Criminal Justice System

304 words - 2 pages forward their cases to the intermediate Court of Appeals for additional assistance. Additionally, the Court of Criminal Appeals, levers equally obligatory and unrestricted affairs. (Texas Courts Online). The types of cases that are heard in a Federal Court are: Constitutionsl Law, Laws and treaties of the U.S., Ambassadors and public ministers, Disputes between two or more states, Admiralty law, and Bankruptcy. Cases heard in the Texas Court System

Krispy Kreme

304 words - 2 pages working capital dropped; and the effectiveness of Krispy Kreme Inc.’s business decreased as well. * The activity ratios decreased gradually; and Krispy Kreme Inc. tried to hide the actual drop of Net Income under a doubtful accounting scheme. * As a result the growth of intangible assets of Company reached the level of other assets. The long-term debt increased too. In the second half of 2004, all stakeholders understood that the actual price of Krispy’s intangibles was close to “nil”, because the company was in pre-bankruptcy condition.

Related Essays

Business Managment Essay

328 words - 2 pages Case I Walnut Street Four The petition for involuntary bankruptcy for the form Walnut Street Four should be granted. The partnership is being forced in an involuntary bankruptcy by its creditor which in this case the partner Bernan is filing bankruptcy. The partner Bernan, as a good chance of the case being file because the general partnership owes their business more than $10,775. The Walnut Street Four fits into the group that can file

Blaw Ch Essay

686 words - 3 pages Quiz ------------------------------------------------- Top of Form Note: It is recommended that you save your response as you complete each question. | Question 1 (1 point)   All but one of the following is a purpose of bankruptcy legislation: Question 1 options: | To allow rehabilitation of debtors. | | To punish recalcitrant debtors. | | To bring about a quick distribution of the debtor’s property among creditors. | | To

Cds (Credit Default Swap) Essay

711 words - 3 pages automotive industry, inability to repay its debt, and weakened by the high labor costs that set by the spinoff agreement with GM, Delphi filed for Chapter 11 bankruptcy protection on Oct. 8, 2005 to reorganize its struggling U.S. operations. After Delphi release the news of filing bankruptcy, the bond holders loosed confidence on Delphi and believed Delphi might default on its bond repayment. Bond holders started to sell Delphi bonds or purchase CDS

Health Care In Different Countrie Essay

618 words - 3 pages Documentary Assignment: “Sick around the World” Great Britain * Longer life expectancy, lower mortality rate. * NHS( national health services) covers everyone * No premium, no co-pay. * Long wait time to see NHS. * Pay for healthcare on tax revenue so government owns hospitals. * No medical bills, no bankruptcy. * Britts pay higher taxes to cover healthcare. * Elective care faces difficulties. * Reduced