Question
In April 2010, a gold mining company, Cahaya Emas was formed. Cahaya Emas had convinced numerous mining experts that they had rights to one of
In April 2010, a gold mining company, Cahaya Emas was formed. Cahaya Emas had convinced numerous mining experts that they had rights to one of the largest gold deposits ever discovered. The gold mine, located on a remote island in the East Coast of Peninsula Malaysia, supposedly had so much gold that the actual price of gold on the open market dropped significantly due to the anticipation of an increased gold supply. Within a few months, thousands of Malaysian big-time investors, pension and mutual fund, managers and many small investors, including factory workers got caught up in Gold fever. The companys stock price shot from pennies to more than $250 per share before a 10-for-1 stock split was announced. Thousands of investors believed they were on the verge of becoming millionaires. Two years later, the president and CFO, who are also the founder of the company were found committing financial statement fraud which went on for about two years. The president and the CFO were the fraud perpetrators. Kate, the accountant was aware of the financial statement fraud being committed by the management of her company, but she never reported it. As is the case with many frauds of this type, numerous class-action lawsuits were filed against Cahaya Emas management, alleging that they misled the shareholders.
REQUIRED: A. Discuss some of the possible reasons for Kates hesitance to come forward to report the financial statement fraud. B. What were some of the perpetrators motivations to commit financial statement fraud?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started