Case #1 Koss sues former executive, auditor over alleged embezzlement
IRAC Case Brief
Issue- Did Sue Sachdeva embezzle $31 million dollars from Koss Corp and Why didn’t the auditor Grant Thornton come across any evidence and just look the other way?
Rules- Sue Sachdeva has allegedly committed an intentional misrepresentation also known as fraud or deceit. She follows under the four elements that describe fraud. The law suit also includes professional negligence and breach of fiduciary duty” (Hajewski, 2010).Grant Thornton has committed duty of care. His job was to look over financial statements and look for any evidence of fraud. He failed to report any wrong doings of Sue Sachdeva
Analysis: Allegedly Sue Sachdeva misrepresented receipts for the past five years from stores such as Neiman Marcus and Saks Fifth Avenue by using just the initials on the company checks. For some reason unknown Grant Thornton did not question the checks or look at the back to see who the checks were really made out to. Koss Corp has brought in another auditor Baker Tilly Virchow Krause LLP, to re- audit the financial statements. So they can acquire evidence to bring a lawsuit again Sue Sachdeva.
Conclusion- Sue Sachdeva and Grant Thornton were both fired and a lawsuit was brought against both to recover the loss. Currently all of Sue’s assets are being taken by the Marshall’s office to be sold in auction for Koss to recoup some loss. Sue is charged with six-counts of indictment and out on a $50,000 signature bond (Hajewski, 2010).
Hajewski, D. (2010). JSOnline. Retrieved from http://www.jsonline.com/business/97068009.html