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Need help with Homework assignment. Question and Rubric below
The case study must be in APA format with a minimum one-page requirement.
Use APA formatting and to document your sources. Submit with cover page. It will be important to cite your sources both in-text and on your reference page.
FRAUD
ETHICS
Thomas Flanagan, Deloitte (LO 3, 4)
Thomas Flanagan was an audit partner and key member of management (vice chairman) at Deloitte LLP, based out of the firm’s Chicago office. During the latter part of his career, he managed a large number of public company audit engagements. Based on knowledge obtained from key members of management of one of his audit clients, Flanagan learned that the client would soon be purchasing another company. Knowing that the value of the acquired company would rise upon the news of the purchase, Flanagan purchased stock in the acquired company. As such, he engaged in insider trading. As the subsequent investigation would reveal, Flanagan traded in securities of at least 12 of his audit clients during 2005–2008. In fact, he made more than 300 trades in shares of the firm’s clients over this period. He concealed his actions by lying on his independence disclosure filings with Deloitte, not revealing the existence of several of his brokerage accounts that would have identified his actions. Ultimately, the SEC uncovered his actions and notified Deloitte. Flanagan resigned from the firm, and Deloitte subsequently sued him for breach of fiduciary duty, fraud, and breach of contract based upon his misconduct. The firm ultimately won a judgment against him. As part of a legal settlement with the firm, Flanagan gave up about $14 million in pension and deferred compensation, according to court papers filed by his attorney. A spokesperson for the firm stated “Deloitte unequivocally condemns the actions of this individual, which are unprecedented in our experience. His personal trading activities were in blatant violation of Deloitte’s strict and clearly stated policies for investments by partners and other professional personnel.”
In August 2010, the SEC charged Thomas Flanagan and his son with insider trading in the securities of several of the firm’s audit clients. The SEC alleged that Flanagan’s illegal trading resulted in profits of more than $430,000. On four occasions, Flanagan shared the nonpublic information with his son, who then traded based on that information for illegal profits of more than $57,000. The SEC also instituted administrative proceedings against Thomas Flanagan, finding that he violated the SEC’s auditor independence rules on 71 occasions between 2003 and 2008. The Flanagans agreed to pay more than $1.1 million to settle the SEC’s charges.
In October 2012, Flanagan was given 21 months in prison for trading on insider information about the accounting firm’s clients. Flanagan, who pleaded guilty to a single count of securities fraud in August 2012, was also sentenced to one year of supervised release and fined $100,000. Securities fraud carries a maximum punishment of 20 years in prison. Flanagan’s plea agreement called for a term of three to four years in prison, and prosecutors sought at least 37 months.
a-Why is owning stock in one’s client considered inappropriate?
b-Why is it important that auditors be independent of their clients?
c-Why did Deloitte take Flanagan’s actions so seriously?
d-What do you think might have led Flanagan to make such poor professional and ethical decisions?
e-Assume that you were working on one of Flanagan’s engagements and you discovered that insider trading was occurring. What procedures should the audit firm have in place to encourage you to report the inappropriate behavior and yet protect your career?
Written Assignment Case – Analysis Format
The purpose of the
Case Study Analysis learning tool is to provide an opportunity for the student(s) to demonstrate the application of knowledge to a management/organizational scenario. Since most management problems are inherently multidimensional, the use of the
Case Study Analysis tool is a ‘hands-on’ process that helps students experience organizational complexities within a thoughtful forum. Therefore, the quality of your responses is more important than the quantity. Keep in mind the student-learning model:
Absorb, Synthesize, Analyze, Apply, Conclude and Demonstrate. Your report will be (1-2 pages in length, APA format).
Defining the central problem (Introduction) 5 PTS
Provide a summary statement to demonstrate an understanding of the problem being presented. Summary statements are, typically, 3 – 5 sentences. This introduction supports your thesis or proposition statement.
Case Summary 5 PTS
The summary should be brief and highlight the key factors or events relevant to your analysis or position.
Identify the relevant factor(s) and explain why they are important to the case. 10 PTS
It is not unusual for a case to have several relevant factors that are crucial to identifying a course of action. However, it is critical to the analysis that the relevant factors number no more than 3 and that it represents the graduate student’s choice (not the instructor) and it is important to state ‘Why’ you think the factor(s) you have chosen are important.
Analysis
10 PTS
The analysis section must be organized in a logical fashion, be written in a manner that advances your thesis; be supported by supplemental research, and demonstrate the ability to apply key course concepts to the actual case.
Recommendations 5 PTS
The recommendations section must include your solutions to the problems you have identified in the analytical section. It is important that your recommendations, if implemented, adequately address all of the problems that you indicate are in existence. Additionally, each recommendation needs to meet the test of feasibility. In other words, are these actions cost-effective, could they realistically be implemented, and are they in compliance with regulations?
Conclusions 5 PTS
Identify a course of action you would take to resolve the case problem and what do you think needs to happen once the action has been taken. Feel free to support your course of action through personal, vicarious and/or classroom experiences.
References 5 PTS
All sources cited within your work are to be included in your references section in APA form.
APA Format, Grammar and Style 5 PTS
Paper must be written in the appropriate APA format and style 6th ed.
