Internal control violations
There was a total internal auditing division violation of the regulation in the K-Marts case. When the disproportional asset inflation was seen in the company revenues, it should have been immediately reported to the SEC and other concern authorities, but it was not done. In fact, the amount inflated was almost 10% of the total revenues are the inflated revenues. Therefore, internal control mechanisms of Kmart should play the role of the whistleblower policies. The critical and unbiased internal audit should have been worked on to forbid persons making false allegations; they should have informed the concerned people and the agents about the false consequences that would happen in case of false allegations.
There …show more content…
If it was done, there should not have been bankruptcy and other events leading to the closure of the company. SAS99 insisted on the consideration of the fraud in a financial statement audit but does not require it to occur in the statement. It is required as per the part of the protocol; the internal auditors should show sufficient professional expertise in critical evaluation of the financial statements and with skepticism. SAS 99 emphasizes that the internal control mechanism and the auditors should take risk of fraud, and should adapt the audit based on the skeptism and the findings. The mechanism of noticing the fraud detection hotline is absent in the Kmart.
Accounting issues and impacts
The actual scandal of the Kmart can be classified as an issue of recognizing the allowances prematurely on the basis of false information provided by the company’s accounting department. The number of vendor representatives co-signed the false and the misleading accounting documents and provided the false or misleading third party confirmations to Kmart’s independent auditor.
As a whole, the inflated revenues of the company increased the stock value of the company shares in the market falsely. The internal control mechanism of Kmart did not evaluate the possible scandal in the financial statement of the company neither did it flag the issue. However the business failed in short time and ultimately caused …show more content…
The company has closed a number of unprofitable stores as well as lay off a number of workers from the company. A number of customers across the nation reduced their spending in Kmart and at the same time the rivals of Kmart like Wal-Mart stores and Target started siphoning off the customers of Kmart. K-Mart merger with Sear Roebuck and Co in 2004 to produce Sears Holdings Corporation has become inevitable. The intention in making the merger is to create a much broader retains presence in the country and to make improvements in the operational domain of the retail chain. The merger resulted in formulation of hybrid store called Sears Essentials. This off-mall approach is formulated as a combination of the Sears and K-Mart’s. It is expected to become more popular but it did not happened like that. Finally Sears announced that it will finally implement a new store termed as Sears Grand.
Conclusion
Kmart being a giant in the retail marketing has failed miserably due to the incompetent management strategies and by incompetent mangers without vision. In fact the company should have used its advantages for better marketing and reorganization of the business strategies. The company should have tried to improve the employee – customer relationships. It should have focused more on the diversity of the customers and taking advantage of the diversity in its products and promotional
There was a total internal auditing division violation of the regulation in the K-Marts case. When the disproportional asset inflation was seen in the company revenues, it should have been immediately reported to the SEC and other concern authorities, but it was not done. In fact, the amount inflated was almost 10% of the total revenues are the inflated revenues. Therefore, internal control mechanisms of Kmart should play the role of the whistleblower policies. The critical and unbiased internal audit should have been worked on to forbid persons making false allegations; they should have informed the concerned people and the agents about the false consequences that would happen in case of false allegations.
There …show more content…
If it was done, there should not have been bankruptcy and other events leading to the closure of the company. SAS99 insisted on the consideration of the fraud in a financial statement audit but does not require it to occur in the statement. It is required as per the part of the protocol; the internal auditors should show sufficient professional expertise in critical evaluation of the financial statements and with skepticism. SAS 99 emphasizes that the internal control mechanism and the auditors should take risk of fraud, and should adapt the audit based on the skeptism and the findings. The mechanism of noticing the fraud detection hotline is absent in the Kmart.
Accounting issues and impacts
The actual scandal of the Kmart can be classified as an issue of recognizing the allowances prematurely on the basis of false information provided by the company’s accounting department. The number of vendor representatives co-signed the false and the misleading accounting documents and provided the false or misleading third party confirmations to Kmart’s independent auditor.
As a whole, the inflated revenues of the company increased the stock value of the company shares in the market falsely. The internal control mechanism of Kmart did not evaluate the possible scandal in the financial statement of the company neither did it flag the issue. However the business failed in short time and ultimately caused …show more content…
The company has closed a number of unprofitable stores as well as lay off a number of workers from the company. A number of customers across the nation reduced their spending in Kmart and at the same time the rivals of Kmart like Wal-Mart stores and Target started siphoning off the customers of Kmart. K-Mart merger with Sear Roebuck and Co in 2004 to produce Sears Holdings Corporation has become inevitable. The intention in making the merger is to create a much broader retains presence in the country and to make improvements in the operational domain of the retail chain. The merger resulted in formulation of hybrid store called Sears Essentials. This off-mall approach is formulated as a combination of the Sears and K-Mart’s. It is expected to become more popular but it did not happened like that. Finally Sears announced that it will finally implement a new store termed as Sears Grand.
Conclusion
Kmart being a giant in the retail marketing has failed miserably due to the incompetent management strategies and by incompetent mangers without vision. In fact the company should have used its advantages for better marketing and reorganization of the business strategies. The company should have tried to improve the employee – customer relationships. It should have focused more on the diversity of the customers and taking advantage of the diversity in its products and promotional