Case 1.3

Caterpillar Inc. In the late 1990s, consultants from Caterpillars audit firm designed a tax-avoidance plan that involved setting up a ghost subsidiary in Switzerland. For several years, Caterpillar diverted a sizable amount of its annual revenues to that subsidiary, result-ing in tax savings of $2.4 billion. A partner of Caterpillars audit firm warned a fellow partner in a private email that their firm needed to create a story to justify the exis-tence of the ghost subsidiary.

KEY TOPICS:

auditing tax-related financial statement amounts materially impacted by a tax-avoidance plan designed by consultants of the audit firm, auditing intercompany transactions, and public interest responsibility imposed on accounting professionals."

So, do fraudsters have common traits? What is the difference between a manager who commits fraud and a consumer who commits fraud? Do they have anything in common, or are there distinct differences? Those are the questions this weeks assignment will answer. You will write a comparison/contrast paper that examines the areas of management and consumer fraud. You should look for ways in which the two are similar and different, giving attention to the environment that may allow the fraud to occur.

Be sure your paper addresses the following: for case 1.3

1. Incorporate common themes from the cases related to the weeks topic, including some background on each case.

2. Identify lessons learned from the cases collectively.

3. Offer recommendations to prevent future occurrences.

If you can use 5 references to include research from the scholarly sources for the week to support your case information.