Cendant Accounting Fraud Case Study
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ScribdTranslationsCendant Accounting Fraud Case Study
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ScribdTranslationsCENTRAL UNIVERSITY
HEADQUARTERS OF PEACE
COMPLEMENTARY PROGRAM IN PUBLIC ACCOUNTING
PRACTICAL CASE NO. 1 CENDANT
Members:
Callisaya Callisaya Daynor Mijail
Callisaya Callisaya Elmer Leonel
Magueño Gordillo Noemi Isabel
Mamani Chavez Ismael Ademar
Mamani Choque Alejandra Patricia
Asignatura:Auditoria Forense
Semestre:Tercero
Período:1/2022
La Paz–Bolivia
• NAME OF THE CRIME
Document Forgery: With a loss of millions of dollars due to the
forgery of documents and financial information, such as:
− Falsified Financial Statements (Projecting an image of growth)
− Inflation in stock prices
Fraud: This consists of the improper appropriation of goods or resources through deception.
false management or malicious diversions. These are crimes committed by employees.
of the organization that exploit their job position to manipulate data or systems in
for your benefit.
Conspiracy: Secret agreement against something or someone, involved in the crime were the
senior executives and employees of the company hiding the theft of money and modification
of financial statements.
• DATE
April 1998
• WHO OR WHOLES COMMITTED THE CRIME
President of the Cendant group of companies, Walter Forbes - Indicted by the Prosecutor's Office
Federal and found guilty of a charge of conspiracy to commit securities fraud
two charges of making false statements, for inflating the reported income for the
Cendant Corporation.
Vice President of the Cendant group of companies E. Kirk Shelton
• DESCRIPTION OF THE CRIME
In 1998, Cendant discovered massive irregularities at CUC, resulting in one of the
largest financial scandals.
At that time it was reported that Vice President E. Kirk Shelton had inflated the income.
from the company at $500 million over a period of three years. It had reported an income
net of $ 55.4 million in 1997 when the true result was a loss of $ 217.2
millions.
As these irregularities in the books of Cendant were discovered in early
In 1998, an audit committee created by the Cendant Board of Directors launched a
research and discovered that the former management team of CUC, including its senior
executives Walter Forbes and Kirk Shelton had been fraudulently preparing
false commercial declarations for several years.
When this report was released to the public, the resulting damage to the market value for the
The company was approximately $14 billion, with a collapse of its shares.
At that moment, this fiasco was the largest case of accounting fraud in the history of the country.
After the accounting scandal was uncovered, Silverman and the Cendant board forced
the resignation of Forbes and Silverman assumed the position of CEO. In March 2001, Forbes and
Shelton were indicted by a federal grand jury and sued by the Securities Commission
and Values, which accused the company of orchestrating massive accounting fraud.
• GENERATED LOSS