Submitted by: Submitted by menabass
Views: 752
Words: 1006
Pages: 5
Category: Business and Industry
Date Submitted: 04/19/2011 03:51 PM
“Financial statements fraud involves the intentional publishing of false
information in any portion of a financial statement (Association of Certified Fraud
Examiners).” The Bre-X Minerals Case, provided false information that became
detrimental to investors. The false information that harmed investors led to the analysis
of how investigating management and directors would help in the determination of the
company’s value of gold prospect’s. This also led to the ways in which investigating the
company’s relationship with other entities, the organization and its industry and the
ways the financial results and operating characteristics help determine the value of Bre-X
gold prospect. In addition an examination of the perpetrators motivations to commit fraud
was evaluated.
Management plays a vital and important role in a business. However,
if management is involved in fraudulent activities management can cause more harm than
good. In the Bre-X Minerals Case, investigating management along with other directors
would have revealed a lot about the company’s standing. One such question that would
have stuck out in investigators minds would be why these personnel are selling off a good
amount of stock during a seemingly rise in stock prices? In the case it stated that Bre-X’s
president and other senior personnel sold off approximately $56 million of their stock
approximately a year before the investigation. The time period between the sell of the
stocks and the investigation is considered to be fraud created insider information period
(Hopwood, Leiner, & Young, 2008, p.271).The Bre-X Case is a key example of
management hiding and trading on bad news which was there was no gold found at all
(Hopwood, Leiner & Young, 2008, p.270).
Also, investigating the company’s relationship with other entities would also help
in the determination of the company’s value of gold prospects because the...