What factors led to the fraud? It has been said that after deregulation in the early 1990’s, corporate conduct was running fast and loose. This deregulation allowed corporations and the accounting industry to self-regulate itself and it was expected that corporations and their boards would do the right thing, thus softening up the business climate and promoting commerce. Unfortunately, when it comes to self-regulations, greed and self-advancement often come to light. Rite Aid installed Martin Grass president in 1988. The younger Grass had recently pulled a coup to remove his father Alex Grass from the CEO position. Alex Grass had founded Rite Aid several decades ago in the 1960’s and had grown the company from a single store to the third largest discount drug chain in America. Even though Alex was a shrewd business man, money was the measure of love with Alex and his children. Alex Grass was grooming his eldest son to eventually take control of the corporation, but the aggressive upbringing he taught his children eventually was his demise. Martin Grass increasingly grew impatient waiting for his father to cede control of the corporation to him and eventually engages in plans with his brother and other board members to dethrone his father Alex and eventually push him out altogether. In 1994 Rite Aid makes Martin Grass CEO and Chairman of the Board. In 1995 the board asks for Alex’s resignation from the Rite Aid Corporation. The rift between father and son was brought to an apex when Martin disses his father to the board and the financial markets as being too fearful and conservative to grow and leverage the Rite Aid brand. Once Martin Grass assumed control and was CEO of Rite Aid, he proceeded to get himself and other executive’... ... middle of paper ... ...he Sarbanes-Oxley act, which began with companies like Rite Aid abusing the deregulated system, are (1) the required attestation by the CEO and the CFO; and (2) better internal control mandates, procedures and documentation requirements. Bibliography of referenced sources http://www.nytimes.com/2002/06/22/business/ex-rite-aid-officials-face-us-charges-of-financial-fraud.html http://online.wsj.com/news/articles/SB108567352366923003 http://www.sec.gov/news/press/2002-92.htm http://www.scu.edu/ethics/practicing/focusareas/business/rite-aid-fraud.pdf http://articles.latimes.com/2003/mar/11/business/fi-rup11.5 “What Happened to Rite Aid?”, Mike Bell, Contemporary Topics in Finance, www3.villanova.edu http://topics.nytimes.com/top/reference/timestopics/people/g/martin_l_grass/index.html https://tippie.uiowa.edu/accounting/mcgladrey/pdf/gao_rite%20aid%20corporation.pdf
Reginald’s first target was Park Sausage. Unfortunately, the deal was lost to another buyer and he was devastated. Two years later (1977), the Almet acquisition fell through. The seller backed out of the deal on the day of closing. After threatening to sue the owner for breach of contract, Lewis was paid $250,000 to drop the suit (all fees and expenses were reimbursed). Determined not to display his disappointment, he came to the conclusion he wasn’t ready. Reginald took a long vacation and began to study every successful takeover he could find. He would be ready to take on his next corporate acquisition with a vengeance…and that he did.
“Throughout the Depression years, the store prospered, even in competition with seven other pharmacies in town,” said Venier. “And we are the last one standing.” After World War II, many of Lexington’s young adults came back to their hometown to start families. They returned to Theatre Pharmacy with their own children and introduced the third generation of customers. Today, many of those children are adults raising families in Lexington and returning to the pharmacy of their childhood.
The Sarbanes-Oxley Act of 2002 (SOX) was named after Senator Paul Sarbanes and Michael Oxley. The Act has 11 titles and there are about six areas that are considered very important. (Sox, 2006) The Sarbanes-Oxley Act of 2002 made publicly traded United States companies create internal controls. The SOX act is mandatory, all companies must comply. These controls maybe costly, but they have indentified areas within companies that need to be protected. It also showed some companies areas that had unnecessary repeated practices. It has given investors a sense of confidence in companies that have complied with the SOX act.
Sears has created a “Financial Crisis” when hedge fund manager Edward Lampert took over control of the company. The mentality of investors of a CFO is an important viewpoint during crisis because it can help streamline process and reduce cost. Retail experience should be dominant the retail in order to feel the pulse of the consumer desires and to determine proper margin levels while eliminating inefficiencies in the organization. According to Marina Strauss of the Globe and Mail, “a sweeping change will be required to improve the retailer’s outlook”. She quoted the (CEO of Sears-Canada) Mr. McDonald saying in a memo that “Our store are too difficult to shop in. We have inconsistent execution…We do not offer the right product in the right market” (STRAUSS M., 2011).
Steve Oliver Maass purchased a grocery store that was in bankruptcy back in 1988, in Cotati, CA, mortgaging his house to come up with the payment of $200,000. Although he had no grocery store experience besides working in the produce department of one, he felt he could not do any worse than the previous owner did. The store was run down and a mess requiring a lot of cleaning. With limited funds, he was only able to paint instead of doing much remodeling, as he wanted to do. Maass renamed the store Oliver’s Market after his middle name, and he and his wife worked the store for the first four years. During those years, Oliver’s added a Service deli and a Health foods section. Following the format of Whole Foods, Oliver’s carried a section of organic health foods and included conventional items as well.
Another substantial problem with Sarbanes-Oxley and Dodd-Frank reform efforts are the misplaced ethical incentives it places on attorneys in advice on the structure of their clients. Since Sarbanes-Oxley only applies to companies traded on public markets, it substantially raises the cost of being public, and creates strong incentives to go-private for management and directors as well as a company’s legal advisors. Lawyers stand to gain substantially not only from the reduced pressures of reporting and monitoring obligations, but additionally from the substantial fees garnered in advising large-scale, multibillion dollar buy-outs. Th...
The Dodd-Frank Wall Street Reform and Consumer Protection Act’s policies haven’t really been implemented to the extent that regulators would have liked. Although the legislation takes many steps in addressing systematic risks in the United States financial system and improving coordination among regulators, some critics believe that alternative options might have been more effective. The coming years will give us a better understanding of how well the Dodd-Frank Act addressed these concerns.
The purpose of this paper is to analyze and discuss the effectiveness of the Target Stores supply chain. Target was founded in 1902 by George Draper Dayton who after partnering with the owner of Goodfellow Dry Goods Company for a year decided he wanted to have more involvement, so he purchased Goodfellows renaming it Dayton Dry Goods Company. After purchasing the store Mr. Dayton remained in management until the time of his death in 1938. By this time the store had seen many changes including a name change in 1911 changing from Dayton Dry Goods Company to The Dayton Company, as well as an addition of the Dayton Foundation in 1918. After Mr. Dayton’s death the family continued managing the business until 1983 in which the last two managing Dayton’s retired, ending 80 years of the Dayton’s family management (Target Corporation, 2014).
introduction of new lines to the company. He was Senior Vice President of Retail Operations at
Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that “cook the books” to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive regulations that hold the CEO and top executives responsible for the numbers they report but problems still occur. To ensure proper accounting standards have been used Sarbanes Oxley also requires that public companies be audited by accounting firms (Livingstone). The problem is that the accounting firms are also public companies that also have to look after their bottom line while still remaining objective with the corporations they audit. When an accounting firm is hired the company that hired them has the power in the relationship. When the company has the power they can bully the firm into doing what they tell them to do. The accounting firm then loses its objectivity and independence making their job ineffective and not accomplishing their goal of honest accounting (Gerard). Their have been 379 convictions of fraud to date, and 3 to 6 new cases opening per month. The problem has clearly not been solved (Ulinski).
"This is why the market keeps going down every day - investors don't know who to trust," said Brett Trueman, an accounting professor from the University of California-Berkeley's Haas School of Business. As these things come out, it just continues to build up"(CBS MarketWatch, Hancock). The memories of the Frauds at Enron and WorldCom still haunt many investors. There have been many accounting scandals in the United States history. The Enron and the WorldCom accounting fraud affected thousands of people and it caused many changes in the rules and regulation of the corporate world. There are many similarities and differences between the two scandals and many rules and regulations have been created in order to prevent frauds like these. Enron Scandal occurred before WorldCom and despite the devastating affect of the Enron Scandal, new rules and regulations were not created in time to prevent the WorldCom Scandal. Accounting scandals like these has changed the corporate world in many ways and people are more cautious about investing because their faith had been shaken by the devastating effects of these scandals. People lost everything they had and all their life-savings. When looking at the accounting scandals in depth, it is unbelievable how much to the extent the accounting standards were broken.
The material used to analyze Wal-Mart strategy consists of the company's annual reports, its Fact Sheets and other information found on the company Internet site. Other information is obtained from outside sources such as Fortune Magazine, and from outside groups who are critical of the corporation. The focus of this analysis will be placed on identifying the resources of the firm, its weaknesses and strengths in terms of its competitive environment. The sections examined will highlight the leadership style of Wal-Mart CEO H. Lee Scott, who inherited the corporate legacy of Wal-Mart founder Sam Walton. Other elements such as the culture, the corporate organization and values of the company come to play.
Douglas Mcmillon has been in the news lately for poor customer service under what seems like a lack of leadership style. Walmart has failed to keep up with changes in the retail environment. Once an ever anticipating, low cost retailer of consumer needs type business to a now slow reaction to change retailer. Buyers’ behavior has changed and so has the business landscape. Leadership must be able to realign strategy to suit consumer need. What works this year may not work next year. Consumers now have zero tolerance for inconvenience of any sort (Mourdoukoutas,
The Sarbanes-Oxley Act of 2002 (SOX) was passed after the Enron scandal had been all over television headlines. It was clear that something had to be done to ensure that companies practiced and adhered to sound accounting principles and that they were verified often. SOX did just that: [it] “imposes more responsibilities on corporate executives and boards of directors to ensure that companies’ internal controls are reliable and effective”. (Weygandt, Kimmel and Kieso, 2008) SOX has increased the job demand for accountants and highlighted the importance of this department to an organization. Companies have experienced increased productivity and efficiency since the implementation of SOX requirements, as the tighter controls have force companies to audit the procedures and methods in which they record, organize, and calculate information. Many shortfalls can be easily brought to light with the new procedures, as they are more thorough and require frequent auditing. Companies that do not comply with SOX are subject to prosecution or fines from the government. SOX created the Public Company A...
The first Wal-Mart store opened in July of 1962 in Rogers, Arkansas by Sam Walton who believed that the future of retailing was in discounting and to avoid competing with established giants like Sears and Woolworth, Wal-Mart’s stated out of the large cities in the beginning and this strategy help avoid competition, while in rural areas Wal-Mart began growing their customer base by offering ways to save money and shorter travel distance, Sam Walton felt the best way to make customers happy was to provide the low prices every day (Farhoomand, 2006). The company needed to continually find ways to control the operating costs so the savings would then be passed on to Wal-Mart customers in the form of lower prices than the competitors. Walton was opposed to having any kind of employee unions for its company and saw them as a disruption and an inconvenience (Farhoomand, 2006). The continued search for lower prices made him aware of business related travel cost, Wal-Mart executives stayed in low cost hotels when they traveled and the cost related to the services provided by suppliers, Wal-Mart helped suppliers improve operations and efficiency to produce lower cost. Walton wanted the suppliers to correct any nonessential or insufficiencies existing in their business structures as a way of gaining lower prices and higher value products for its Wal-Mart stores. To further push savings Wal-Mart forced cost down by eliminating the middleman and buying directly from the manufacturers. This cost saving also applied to executive salaries Walton felt providing employees with stock options, training opportunities, and allow employees to grow and develop would be a better way to engage and involve them in his vision (Farhoomand, 2006).