If you were anywhere near the East Coast in the 1980s, you undoubtedly saw those TV commercials. The raucous ads saturated the airwaves in the tri-state area and helped Crazy Eddie's quickly become the dominant consumer electronics retailer in New York, New Jersey and Connecticut.

As it turned out, "Crazy" Eddie Antar, who was behind one of the twentieth century's most infamous financial statement frauds, wasn't crazy at alljust crooked. Indeed, the face on the tube wasn't even his (it belonged to an actor). The real Eddie Antar didn't have time for acting. He and members of his family were too busy engineering a $120 million rip-off. Much of the ill-gotten loot was placed in secret overseas bank accounts. Once discovered, Antar spent several years on the lam and another several behind bars. According to a senior SEC official, "This may not be the biggest [financial statement] fraud of all time, but for outrageousness, it is going to be very hard to beat." Even though the fraud is more than two decades old, it provides vivid examples of how these crimes can be pulled off and how auditors can be deceived.

a) Three areas where there were weaknesses in the internal controls at Crazy Eddie.

b) Three audit procedures that the auditor could have done to detect the fraud scheme.