English Case Studies

sEcnoN oNE CoupnsuENslvti C'asss

for the position' Eventuallty, Antar's fathe

and several cousinswould assume leade

than one dozen other relertives would ho

Crozy Eddie's Formurlo for

In the early 1980s, sales in the consumel

the four-year period from 1981 to 1984 a

products grew at an ever-increasing pi

into consumer electronics supermarket

retail outlets with every electronic gad

brands of those products; as possible' B

lines. Following are thos'e product lines

Eddie's i987 sales.

TeLevis'ions Audio products and sYstems Portable and Persona[ e[ectronic Car stereos Accessories and taPes C o m p u t e r s a n d g a m e s Miscetlaneous item s-incl"udi n g

air condjtjoners, and sma|.[ aP

TotaI

, sister, two brothers, uncle, brother-in-law,

ip positions with Crazy Eddie, while more

minor positions with the firm'

electronics industry exploded, doubling in

one. As the public's demand for electronic

e, Antar converted his Crazy Eddie stores

Antar stocked the shelves of Crazy Eddie's

t he could find and with as many different

7987,the company featured seven product

nd therir percentage contributions to Crazy

53olo

I f ,

t0 5 4 3

t0 100Y0

pplenlent each store's profits by pressuring

inties. Many, if not most' of the repair costs

; suppiiers. His ability to purchase electronic

rate prices enabled him to become a "tran-

u goodt to smaller consumer electronics re-

ugh *unufacturers frowned on this practice

ih, Antar continually increased the scale of

rsonality and part-time actor known as Doc-

:rtisin!;spokesperson' Over the 15 years that

iercing television commercials that featured

)s are insane!" brought the company national

Dan Akrovd on SaturdaY Night Liue' ed as the focal theme of the company's ad-

misecl to refund the diflerence between the

i c r o w a v e s . |'iances

Antar encouraged his salespeople to

customers to buy extended product w

that Crazy Eddie paid urnder these war nties rl/ere recovered by the company from

manufacturers that had issued factory arranLties on the products. As a result, the

in on much of its warrantY revenue'

ate 191'/0s and early 1980s, Antar began ex-

tracting large price concessions from h

products in large quanlities and at cu

company realized a 100 percent profit

As his firm grew raPidlY during the

ihipp"t," or secondary supplier, of th

tailers in the New York City area' Alth

and often threatened to stop selling to

his transhiPPing oPeration.

"recognition quotient" among the put

York City. Doctor Jerry's series of ear- him screaming "Crazy liddie-His pri

notoriety when they welre parodied by

Crazy Eddie's discournting policy se

vertising campaigns. T'he company p

selling price of a product and any lc ler price for that same item that a customer

ate. Despite the advertising barrage intended

The most imPortant ingredient in A

vertising. Antar created an advertising tar's ntarketing strategy was large-scale ad-

umbretla' over his company's principal retail

market that included the denselY lated area within a 150-mile radius of New

York City. Antar blanketed this region ith rau,cous, sometimes annoying, but always

memorable radio and television comm rcials.

In 1972, Antar hired a local radio

tor Jerry to serve as Crilzy Eddie's ad

the bug-eyed Doctor Jelrry hawked pr ucts for Crazy Eddie, he achieved a higher

ic thanr Ed Koch, the longtime mayor of New

found within 30 days of the purchase

cAsE t.8 Cnqzv EonE, INc.

to convin the public that Crazy Eddie was a deep-disconter, the company's Prices

on most P oducts were in line with those of its maior co etitors. Customers drawn

to Crazy die outlets by "advertised specials" were rou ely diverted bY sales staff

to higher- riced merchandise.

Cro;zy ie Goes Public In i983, A tar decided to sell stock in CraLzy Eddie to rai capital to finance his

ag-

company' flnancial records were in disarriry. Among othe

underwri were extensive related-party tr,ansactions, inte

and spe tive investments unrelated tothe company's p

underwri g firm was also disturbed to firrd that nearly al

members of the Antar family. Certain of these i

wife and her, were receiving salaries approaching $1 T o p re for the IPO, the underwriter encouraged A

of th,e and president, to clean up the company's a

gresslve e Eddie's in

utives

cial affai who had

dediic by a dee cause of

Crazy in ttre I

pansion program. The underwriting firm retai

ial public offering (lPO) for more than one ye

. The underwriter also urged Antar to hire a rience with a public company and who

staff."3 Another analyst wrote ttrat Antar is a "

ie's stock skyrocketed. Many investors who pu

realized a 1,000 percent increase in the value

ed by r\ntar delayed CrazY r after discovering that the problerns uncovered bY the

.free loans to emPloYees, ncipal line of business. The of the coilp&nY's keY exec-

ividuials, including Antar's

,000 for little or no work. . Crazv Eddie's chairman

nting records and finan- ief financial officer (CFO) not a rnember of the Antar quesl.ion the comPetence ite thr: underwriter's con- Crazy Eddie's CFO.

lliant nnerchant surrounded

f their investments.

. i

round Elffort," The Wall Street

Crazy Elddie Antar," Crain's New

family. T ol Crazy

underwriter warned Antar that investors wo

Antar ed hard to convince the investment commun

die's executives who were hiis relatives.

cern, Ant r hired his first cousin, Sam E. Antar, to serve

The sal of Crazv Eddie's stock to the public was a tr endous success. Because

the IPO oversubscribed, the company's underwriter o ined permission from the

SEC to 200,000 more shares than origi:nally planned' lowing the public offering, partir:ularly fi nancial ana-

lysts, that painted a

is firm was financially strong anLd well mana . At every opportunitY, Antar

icture of continued growth andincreased ma share for CrazY Eddie.

One t tic Antar used to convince financial analysts t at the company had a rosY

future w to invite them to a store and demonstrate in n hris uncanny abilitY to

"close" s les. Such tactics worked to perfection as ana sts from prominent invest-

ment fi released glowing reports regarding Crazy Ed ie's mttnagement team and azy Ecldie is a disciPlined,the com ny's bright prospects. One arralyst wrote, "C

cornLpetetly organized firm with a sophristicated ma ement and a well-trained,

Iy dedicated organization eager to create an rtanl. retail business.'4 Be-

h reports and continued strong operating Its (as reflected bY the com- and Exhibit 2), the Price of :hased the comPany's stock

pan'y's 1 1987 financial statements shown in Exhibit

Crozy Despite that the welll wit

d i e G o e s . . . B u s t

3. J. E. Ta um, "How Mounting Woes at Ctazy Eddie Sank Tur

Journal, l0 uly 1989, A1, A4.

4 . G . B e l and P. Furman, "Calculated Madness: The Rise and Fall

razy Eddie's impressive operating results OurinlS the nrid-1980s and the fact

,*puny', stock was one of the hLottest investme{rts on lqt S{ee.t, all was not

n ti,* fir*. By 1986, the company was in deepltrouble. By the latter part of

York , 5 J u n e 1 9 8 9 , 2 6 . )

sEcTtoN oNE CoupruHENsrvE Cases

EXHIBIT I

1984-1987 BaLANcr SusErs oF CRAZY Eoots

cnAzv

M;r;h 1;: 798i

l = l - , s't i,,i+t , 72'7t957

" io.84o, 1.49;A7Z

, , 1 0 , 6 3 9 , '

i6T,s6l

M a y 3 1 , L984 ,

's|z1te $ 1 , 3 7 s | rvoo zi,j,+s

.:'ia 14

!;,:r1 ;,1 1; ,r' 1'.: :

j : . - .' '

I t , r o '., ii ,6aia

? 4 i 6 l j

:-q,fl $lza,gso =5 $P,t#Fi:,

' ' ' ' . . .' 5 0 , 5 7 4 ,

, 5;6oo 6 . 2 2 4 ' ,

' ' , : rhi t, i.,..T r

considerably as compared with the dra during the early 1980s. Additionally, the ind had become saturated with retailers, particularly in major metropolitan areas h as |{ew York City, Crazy Eddie's home base. Increased competition meant smalle profit rnargins for Crazy Eddie and dimin- ished Antar's ability to extract sweetheart d Is from his suppliers.

asingl'y competitive consumer electron*

that year, the boom days haLd ended for th sales of consumer electronics were still inc

Besides the problems posed by the inc ics industry, Crazy Eddie faced a corpo pling of the company's annual sales volu

consurner electronics industry. Although easing, the rate of growth had tapered off tic gro'wth rates realized by the industry

te meltdown in the late 1980s. The tri-

M a r c h . 3 ,

e betvyeen 1984 and 1987 and the more

::$ t:.=

.*: ,.:-ii :i::€ ,-$

cAsE t.8

Net sates Cost of aoods [otd'

G.ross,pr,ofit Selling, gener{[

and adminiltrative

CRAZY EDDIE, INE: INC0ME STATEMENTS (.000s omitted)

EXHIBIT 2

1984-1987 lNconar SratEunrurs op Cnezy Eoom

Eoots, INc.

Year Ended March t,

' , ' ' : ' , ! $ $ J ' . ' , , ,

Year Ernded M a r i h : 2 ,

:',.i 1.9,€i€ i'

$ 2 6 2 , , 2 6 8 (1"94,371.\

67,597

nini Enuei

,Vealfn-de'd

. May'Q.1;,,,

.::, ,. ,1984,': '

$1.i7,285 ( 1 0 6 , 9 3 4 )

,,',,,,,-ffifi,

nfhs.; rih,3; 5

$352,523 (272,255)

3,ry ( 6 1 t , 3 4 1 )

7 403

ts,ziil: t.

2 T , 0 9 1

. (500) (i0,oo1) :

$:lo,l9o: : - ,

$ 1 ' /

4

t +

'5:,),T9;,;,,,

J,;;[[. J:',:; , 8 9 8

expense . interest and

o t h e r i n c o Interest

expenie Income:befo

taxes Penslon

'

N e t i n c o m e , p.t tf ite

contributi InCome taxes

Net,irrcome l

i.(j.2ie7$,

3,210

(820) , . - 27,3'J.2

tso0l' (13,268) $15,344

,211

complex onsibilities associated with managing a publi company imposed an

438

t1'61 : , ; : , 1 , . ] ,

16001 ,734), :;8.2i9.

,:$i34 J.

ministrative burden on Crazy lE,ddie's executi s. Cc,mplicating mat- isintegration of Antar's inner circle of relati s, who had served as advisers during the first 15 years of his com any's clxistence. Antar f his relatives to leave the firrn after thev sid with his former wife rce. Even as Crazy Eddie's internal affairs iraled into chaos and

ed toward financial disaster, rA/all Street con inued to tout the com-

a "can't miss" investment. In late 1 Eddie Antar resigned as company president, tthough he retained the

title of chai n of the board. A fewweeks later, he simply d ped out of sight. In the

absence of A lar, Crazy Eddie's financial condition worsene rapidl l. Poor operating results that t company reported for the founth quarter of al 1987-which ended

March 1, 198 nI Crazy Eddie's stock price into a tailspi from v'rhich it never re- well-known financierscovered. In mber 1987, a takeover group headed by t

gained con I of the company. A company-wide physical in ntory l.aken by the new d to earlier. That inven- company had reported Eddie into bankruptcy

owners un red the $65 million shortage ol'inventory allu which was larger than the cumulative profits th ublic in 1984, would eventually plunge Craz latory authorities in pursuit of Eddie Antar for explanation,

Chorges Accounfing lrregulorities

e n o r m o u s a ters was the his prinr:ipal forced many in a bitter di the firm lurc pany's stock

tory shortage since it went and send reg

Extensive in regulatory a and his form

tigations of Crazy Eddie's flnancial records hy tt't. laew owners and

horities culminated in fraud charges being fifed against Eddie Antar

associates. The SEC alleged that after Crazy n{Aie went public in 1984,

sEcnoN oNE Coupnrsexslvn Casrs

Antar became preoccupied with the p e of his company's stock. Antar realized that Crazy Eddie had to keep posting i ressive operating results to maintain the

upward trend in the stock's price. An investigation revealed that within the first . Antar ordered a subordinate to overstatesix months after the company went publi

inventory by $2 million, resulting in the rm's gross profit being overstated by the

same amount. The following year Antar ered year-end inventory to be overstated

company's accounting records. I As the economic fortun,es of Crazy Eddfe began to fade in the late 1980s, Antar be-

came more desperate in his efforts to enh[nce the company's reported revenues and

profits. He ordered company employees tp inclurle in inventory consigned merchan-

dise and goods being returned to supplitrs. Another fraudulent tactic Antar used to

overstate inventory involved transhippingltransac:tions, the large-volume transactions

between crazy Eddie and many of its sm{ller competitors. Antar knew that financial analysts closply monitor the annual percentage change

in ,,same-store" sales for retailers. A decllne in this percentage is seen as a negative

indicator of a retailer's future financial pefformance, As the consumer electronics in-

dustry became increasing;ly crowded, th{ r€V€I}uL€s oI Crazy Eddie's individual stores

began to fall, although th<l firm's total revfnues continued to climb due to new stores

neing opened each year. To remedy the lOrop in same-store sales, Antar instructed

his employees to record selected transhif,Ring transactiog as retailsales of individ-

ual stores. For instance, suppose that Cra)zy Eddie sold 100 microwaves costing $180

each to another retailer at a per unit pricp of $2Ct0. The $20,000 in sales would be.re-

corded as retail sales with a normal grosslprofit nnargin of 30 to 50 percent-meaning

that inventory would not be credited fof the total number of microwaves actually

sold. This practice killed two birds with {he pro',ierbial stone. Same-store sales were

inflated forselected operzrting units, and ilnventory was overstated with a correspond-

able, employees prepared bogus debit os from vendors and entered them in the

ing increase in gross profit from sales'

Where Were the Auclitors? "Where were the auditors;?" was a questi n posed repeatedly by investors, creditors,

by $g million and accounts payable to b documented that Crazy Eddie employee ing inventory count sheets for items that

and other interested parties when the p

different accounting firms audited Craz

to serve as Crazy Eddie's audit firm. M practice with several prominent clients

undetstated by $3 million. Court records overslated year-end inventory by prepar- id nol, exist. To understate accounts pay-

blic learned of the Crazy Eddie fraud. Four Eddie's financial statements over its turbu-

in Hurrlman had a nationwide accounting n the consumer electronics industry. In the

lent history. Antar dismissed Crazy Eddi 's first accounting firm, a local firm, before

he took the company public' The unde iter that managed Crazy Eddie's IPO urged

Antar to retain a more prestigious accou in the company's financial statements.

ting firrn to increase the public's confidence s a result, Antar retained Main Hurdman

mid-1980s, Peat Marwick became Crazy Hurdman. Following the corporate take

ie's audit firm when it merged with Main

ver of 'Crazy Eddie in 1987, the new owners

replaced Peat Marwick with Touche R Much of the criticism triggered by t e Craz',y Eddie scandal centered on Main

Hurdman and its successor, Peat Marwi Main Hurdman charged Crazy Eddie com-

paratively modest fees for the compan annual audits. A leading critic of maior ac-

counting firms alleged thrat Main Hurd had "lowballed" to obtain Crazy Eddie as

the com ny consulting services.

In one ', Main Hurdman charged only $85,000 to do complete audit of CrazY

Eddi, a business with hundreds of millions of dollars in ed reuenues, dozens

of retai stores, and two large warehouse:;. At the uery time that Main Hurdman

was c conducting an

audlt, i ons o,f dollars to comput-

erize zy Eddie's inuentory sYstem-5

individual challenged Main Hurdman's abil y to objectively audit an in-

em that it had effectively developed. Main H rdman''s independence was

also qu ioned because many of Crazy Eddie's accou nts were former members

of that a unting firm. Critics charge ttrat a company hat hir,es one or more of its

former a ditors can more easily conceal fraudulent ac ivities during the course of

subsequ t audits. That is, a former auditor may help hi or her new emploYer under-

mlne su uent audits. In fact, Crazy Ecldie's practice hiring its former auditors is ch "placements" with auditnot unus

clients.

You ld think that if an auditor wantecl to leaue a publ' accounting fr.rm, he or she had audited. [nstead, iust their personnel to work for

usould discouraged from going to work for clients the the tte is true with big accounting firms encourogin

clients the apparent belief that it helps cement the acc ta nt- clie nt re I at ion s hiP.6

Most the criticism directed at Crazy Eddie's audito stemnted from their failure

to unco r the huge overstatement of the company's in ntory and the material un-

derstate ent of accounts payable. Third parties who ed suit against the auditors

accused hem of "aiding and abetting" the fraud by fail ng to thoroughlY investigate

nunneros suspicious circumstances they discovered' f parl.icular concern were

several orted instances in which the auditors reques client documents, onlY to

be told t at those documents had been lost or inadvert ly de;troyed.

In Pea in a larg

Marwick and Main Hurdman's defense, Anta and his associates engaged

scale plan to deceive the auditors. For exam le, after determining which

invent sites the auditors would be visiting at year d, Anl.ar shipped sufficient shortages. Likewise , CrazYinvento to those stores or warehouses to conceal an

Eddie rsonnel systematically destroyed incriminati g documents to conceal ln-

his enLployees to "iunk" the

CASE I.8

an audit

This s ventory

ventory sophisti return t

the aud in time.

A par several include of acco sion of

5 . M . L 41.

al. Many accounting firms actually arrange s

ortages from the auditors. Antar also orde ted, computer-based inventory system desig bv l\{ain Hurdman and to

the outdated manual inventory system prevl usly used bY the company.

The ab nce of a computer-based inventory system m de it much more difficult for

CnAZv Ennm, INc.

lient, realizing that it could make up for any I audit revenue by selling

ndal utas the involvement of lent schemes. These Parties

rging the bargain basement prtce of $85,000 for

consulting diuision was chargin'g Crazy Eddie m

ularly disturbing aspect of the Crazy Eddie sc y accounting employees in the various fraud

tors to determine exactly how much invento y the firm had at anY Point

the director of the internal audit staff, the acti g controller, and the director

nts payable. Past audit failures demonstrate t t a fraud involving the collu-

accounting personnel is difficult for audito to uncover.

6. rhid.,4

iss, 'Auditors: Be Watchdogs, Not Just Bean Counters," 'A Today, 15 November 1993,

f f i f f i x L

n e 1 9 8 9 , C r a z y E d d i e f i l e d a C h a p t e r 1 1

<ruptcy petition after losing its line of credit. rthat year,the company closed its remaining

and liquidated its assets. Meanwhile, Eddie was named as a defendant in several law-

, including a large civil suit filed by the SEC a criminal indictment filed by a. U.S. district ney. In January 1990, a federal judge ordered r to repatriate $52 million that tre had trans-

to foreign bank accounts in 1987. following month, federal marshals began

hing for Antar after he failed to appear in

ral court. A judge had scheduled a hearing rce Antar to account for the funds he had

sferred to overseas bank accounts' After a r s u r r e n d e r e d t o f e d e r a l m a r s h a l s , t h e

e found him in contempt and released him

is own recognizance. Following this court

earance, Antar became a fugitive. For the

t two years, Antar eluded federal authorities pite reported sightings of him in Brooklyn, salem, and South America. n June 25, 1992,lsraeli police arrested Ed- Antar. At the time, he was living in a small n outside Tel Aviv and posing as an Israeli zen. David Jacob Levi Cohen. On Decem-

31, 1992, Antar's attorney announced that

extradition agreement had been reached the U.S. Department of Justice and Israeli

horities. After being extraditerl, Antar was

victed in Julv 1993 on 17 counts of financial d including racketeering, conspiracy, and

il fraud. In May 1994, a feder;rl iudge sen- ced Antar to 72 i/2 years in federal prison

ordered him to pay restitution of $121 million

mer stockholders and creditors. federal appeals court overturned Antar's

u d c o n v i c t i o n i n A p r i l 1 9 9 5 . T h e a p p e a l s rt ruled that the iudge who trad presided

r Antar's trial had been biasecl against him

ordered that a new trial be held under a dif- nt judge. In May 1996, Antar's attorneys and

?. F. A. McMorris, "Crazy Eddie Inc.'s Antar Admits

Journal, g May 1996, 87.

8. Sam E. Antar, "Ctazy Eddie Speaks, Cousin Sam

(http://whitecollarfraud.blogspot,com), 25 June 200

SECTION ONE CON4PNSHEI'ISIVE CASES

ffiwffi ederall prosecutors arranged a plea bargain

g r e e m e n t t o s e t t l e t h e c h a r g e s o u t s t a n d i n g gainst him. Under the terms of this agreement, ntar pleaded guilty to one federal charge of

a c k e t r : e r i n g a n d p u b l i c l y a d m i t t e d , f o r t h e irst tirne, that he had defrauded investors by

a n i p u l a t i n g h i s c o m p a n y ' s a c c o u n t i n g r e - o r d s . F o l l o w i n g h i s a d m i s s i o n o f g u i l t , o l : l e

f the prosecuting attorneys commented that

"Crazy Eddie wasn't cYazy, he was crooked."T

In eeLrly 1997, Eddie Antar was sentenced to

ven'years in federal prison. Antar, who had

remairred in custody since being extradited to

the United States in 1993, received credit for the time he had already spent in prison. As a result, he wa:; required to serve only two years of his seven-r/ear sentence.

Seve,ral of Antar's former cohorts have also

been convicted or have pleaded guilty to fraud

charges, including Sam E. Antar, Crazy Eddie's

former CFO. After being released from prison,

Sam E. Antar openly described and discussed

h i s r o l e i n t h e f r a u d m a s t e r m i n d e d b y h i s

cousin. He revealed that Eddie had financed his

collegr: degree in accounting because the fam-

ily nee,ded an expert accountant to help design,

manage, and conceal the company's fraudulent

schernres. Sam graduated magna cum laude in

accounting and passed the CPA exam on his

first attempt. Upon loining Crazy Eddie, Sam

confessed that he became a "thug" and a will-

ing participant in the massive fraud:

Cra.zy Eddie was an empire built on decett. The

contpany was rotten to its core. Eddte Antar, his fath;er, brothers, brother-in-lau), me and others

forr,ned the nucleus of this massiue cr[minal en-

t€rpvisg. In our day, we considered the humanity

of ctthers as weaknesses to be exploited in our

effctrts to commit our crimes. We simply gaue

inue-stors, creditors, and many customers a rau)

decl. . . . We were nothing but cold-hearted and

sot,'lless criminals. We were two-bit thugs.s

ilt in Racketeering Conspiracy," The Wall Street

. Aniar Flesponds," White Collar Fraud

CnazY Eoots, Inc.

n agreement was reached to

nding civil lawsuits sPawned

I n t h e l a t purchased t

ie fraud. The contributions ol pany's forme

ants to the $42 million settle- E d d i e - H i s

n o t d i s c l o s e d ; h o w e v e r , t h e

i b u t i n g t o t h a t P o o l i n c l u d e d

sold in bank 1998, two ne

d t h e l o c a l a c c o u n t i n g f i r m

die before the company went uncle's busin

ement authorities recovered

p r i n c i p a l l Y retailer of c New York bm i l l i o n f r o m t h e P a r t i e s t h a t

f r a u d . T h o s e f u n d s i n c l u d e d

i l l i o n t h a t a f e d e r a l i u d g e o r - companY ha sumer electr

r, Eddie Antar's father, to sur-

2002.

force" behin ualwas non

C A S E I . E

I n M a r c h 1 9 9 3 ,

settle dozens of by the CrazY Ed the various defe m e n t P o o l w e r e d e f e n d a n t s c o n t P e a t M a r w i c k a used by CrazY E public. Law enf

m o r e t h a n $ 1 5 0 profited from th m o r e t h a n $ 4 0 d e r e d S a m A n t render in Aug

Q.uesti i . C l o m

pen fiina audit sk.

2. Identi

paya the i

3 . T h e chan r;hou

1 9 9 0 : ; , E , d d i e A n t a r ' s m o t h e r

Craz'y Eddie logo and the com-

adverrfising catch Phrase, "CrazY

ices are insane!" which had been

te key ratios and other financial measures lor I

1984-1987. Identify and briefly explain the red

alstatements that suggested the firm posed a

its marketing efforts.s That individ-

othertltan CrazY Eddie Antar'lo

. The "ne\M" CrazY Eddie oPerated a ma.il-order and Internet-based

sumer electronics. In June 2001, a

iness publication reported that the

hired zr former executive in the con-

ics inclustry to serve as the "creative

razv E,ddie during the

rptcy Frroceedings years earlier' In

hews of Eddie Antar revived their

flags in CrazY Eddie's igher-than-normal level of

to the rletection of the

zy Eddie Personnel: (a) the

s as retail sales, and (d)

nventorY.

ing ra1:id and dramatic audit client's industrY ussion to CrazY Eddie'

udit c,cntext. How can this

audit services?

udit team in 1986. You were

rocedures. You selected 30

end: 15i in the few daYs Prior

4. Expl prac

follo falsifi ution of inventory count sheets,

(b) the bogus ebit memos for accounts

y specific audit procedures that might have lec

ing u..ounting irregularities perpetrated !t- tl

le, (c) the recording of transhipping transactto

=tusion of consign.d *e"handise in year-end

tail consumer electronics industry was underg

es during the 1980s. Discuss how*changes.ina

affect urOit planning decisions' Relate this di

in what is implied by the term L:wballing in an

ce potentially affeci the quality of independen

e that you were a member of the Crazy Eddie.

:d to test the client's year-end inventory cutoff

e s e n t e r e d i n t h e a c c o u n t i n g r e c o r d s n e a r y e a l client's fiscal year-end and 15 in the first

few d

lient personn.l were unable to locate 10 of ther

our rrp.riors have responded to this situation?

5. Assu assi tnvol

t o t that and

ys of the new Year. Assume

: invoi,ces. How should You Explain.

6. Sho ld comPanies be allowed to hire individuals w formerlY served as

their

ind endent auditors?Discuss the Pros and cons of his pretctice.

9. Crain' New York Business,"Week in Review"' 11 June 2001' 34'

1 0 . I n , the "new" Crazy Eddie failed' The company's trademarks re Durchased

bY a Texas-based firm'