We studied a number of different businesses that collapsed due to fraud but the difficulty was in early detection. For the following case respond to the question and identify the effects on the financial statements and any concerns you may have. Also please note if you see any similarities to any of the companies we studied.

CCM has many contracts that are long term and cross over reporting periods. They report their earnings before interest and taxes by prorating completed contracts and releasing the revenues and matching costs into each period. This proportional reporting has come under question from their auditors since they are concerned since none of the revenue is received until the end and there are many disputes about the eventual price due to a clause that allows price adjustments. They are considering reporting two versions of their earnings numbers.

2. Compare and contrast Charles Ponzi and Bernie Madoff and their two Ponzi schemes. Why wasnt Madoffs scheme discovered earlier? (3 marks, 150 word limit)