History of Asset Misappropriations

The Acts of Enclosure – England 
  • Prohibited pilfering company assets 
The Carrier’s Case – Southampton, England (1473) 
  • Defendant took bales of wool and textile products
  • Precedent setting embezzlement case
The Norton Warburg Group Ltd.
  • London, England (late 1970’s) 
  • Investment management firm
  • Primary client/business partner - Pink Floyd
  • Pink Floyd pulled out assets (₤860,000) 
Deceived clients and embezzled investor funds (₤4.5 million)
  • London, Inggris (1970's terlambat; almarhum) 
  •  Manajemen investasi dengan teguh 
  •  Mitra client/business utama -Floyd Merah Muda 
  •  Floyd Merah Muda mencabut aktiva-aktiva (£860,000) 
  •  Klien-klien ditipu dan jo dana pemodal yang digelapkan (£45 juta) 
The United Way of America (early 1990’s)
  • President William Aramony
  • $1.2 million for lavish lifestyle and a girlfriend  
Andrew Bellucci – New York
  • “Pizza historian”
  • Had embezzled from law firm of Newman Schlau Fitch and Lane
  • FBI caught him on a TV commercial
Bank of Tokyo – (1996) 
  • Hideki Nishiyama embezzled $9 million by forging loan applications
 Willis A. Carto – (1994)
  • Founder of a controversial revisionist group
  • Embezzled $7.5 million 

What is a Misappropriation?

Misuse of a company asset for personal gain
Includes more than theft or embezzlement
  • Use of company computer to surf the net
  • Company car for personal trips, etc.
  • Steal cash
  • False invoicing, etc.

Defining Assets 

Assets = resources owned by the organization
Two categories:
  1. Intangible Assets
  2. Tangible Assets

Intangible Assets

Not physically identifiable
Usually represented by contractual right
Examples: 
  • Patents, trademarks, leaseholds
  • Goodwill
  • Trade secrets 

Tangible Assets

Five principal types: 
  • Cash
  • Accounts receivable
  • Inventory
  • Plant and equipment
  • Investments
Most asset misappropriations involve tangible assets (especially cash)

How Asset Misappropriations Affect Books of Account

  • Assets = Liabilities + Owner’s Equity
  • Asset Misappropriation causes $ for $ set-off to owner’s equity
  • Affects balance sheet via income statement
  • Revenue – expenses = profit
  • Asset misappropriation essentially an expense of doing business
  • But we don’t know how big the expense is or when it occurs

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