Bre X Minerals

“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...