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As he began doing business, Minkow soon realized that carpet cleaning was a difficult way to earn money because customers always complained and vendors demanded payments. Answer questions 1, 2, and 4 found at the end of the case.

The purpose for this communication is to help the successor auditor evaluate whether to accept the engagement. An auditor should withdraw from the engagement or at a minimum disclaim an opinion when a client imposes scope limitations that prevents the necessary auditing procedures from being performed. This is another difference between a review and an audit. The reported profits of the firm were nonexistent and the huge restoration contracts, imaginary. As he began doing business, Minkow soon realized that carpet cleaning was a difficult way to earn money because customers always complained and vendors demanded payments. The auditor insisted on visiting restoration site in Sacramento, so Minkow had to agree. Barry Minkow, with the help of few friends, managed to convince banks to loan him money to fund his carpet cleaning business by fabricating insurance restoration contracts. Tactics are utilized to inflate or deflate revenues and expenses to arrive at the desired financial position of executives of the business. What could you want better than that? Minkow quickly recognized that carpet cleaning was a difficult way to earn a livelihood.

This error will be corrected in subsequent. But, in fact, the auditor didnt check the permit for restoration or papers for ownership as they signed an agreement on not making any phone calls to any individuals involved in building restoration.

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Thibodeau and Deborah Freier. The company that Minkow founded was, in fact, an elaborate Ponzi scheme. Where were the independent auditors and the others that are paid to alert the public to fraud and deceit?

Analysis Barry Minkow wasnt just another shady character in the carpet cleaning industry, he was the king of shady.

Question 1 A review is like an audit yet is less in extension and just gives restricted affirmation with respect to the financial statements. Although confirmations are usually a very reliable type of evidence since it involves an independent third-party. The case readings are not intended to serve as a source of primary data or as an illustration of effective or ineffective auditing. By that time Minkow had established fake insurance company and Padgett had got the top position in it to confirm fraudulent restoration contracts, so Greenspan didnt notice any problems with those sites. Thats why he came up with the idea of forgeries and thefts from his insurance company. An auditor cannot accumulate enough evidence through a review to issue an opinion. Dingell, chairman of the U. This error will be corrected in subsequent. Sixteen year old Barry Minkow, was a thief, a liar, and a fraud who successfully managed to pull off the ultimate con when he took his company public.

Throughout his short business career, Minkow realized the benefits of having an extensive social network of friends and acquaintances. The case readings are not intended to serve as a source of primary data or as an illustration of effective or ineffective auditing.

There are essentially no barriers to entry: no licensing requirements, no apprenticeships to be served, and only a minimal amount of start-up capital needed.

Sixteen year old Barry Minkow, was a thief, a liar, and a fraud who successfully managed to pull off the ultimate con when he took his company public.

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ZZZZ Best Company