Essay on Case Study : Grace Vs. Sec. W. R. Grace

1355 Words Sep 6th, 2015 6 Pages
Rachel Varley
Weston Smith
Courtney Bouchez
ACC 4313
9/4/15
W. R. Grace vs. SEC
W. R. Grace trouble all started in the early 1990’s. W. R. Grace is a catalyst manufacturer, they specialize in petroleum refining and chemical processing catalysts. The relatively successful company had run into some unexpected spike in profits. The executives knew that they could not keep up this growth and eventually the profit would decrease again and investors would be concerned. So instead they decided to take the 30% growth and stash it in a secret fund, they participated in profit management. The way W. R. Grace justified this was they decided it was immaterial and it would not influence the investor’s decisions. PwC, an external public auditing firm came into W. R. Grace to do their annual report, while going over the numbers they discovered the hidden profit. PwC repeatedly told W. R. Grace that it was wrong, and mentioned it in their memos, but ultimately gave W. R. Grace a clean report, and signed it. Mr. Eatough the company 's, internal audit chief grew concerned and did not feel right about the profit management. Several internal auditors and the even a few PwC auditors discussed the issue and lack of controls, and all concluded it was not right. So Mr. Eatough decided that it was time to discuss this problem with the internal audit committee, once before them he brought up the "deliberate deferral of reporting of income." He did not call it fraud however because he was afraid…

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