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Xerox Financial Fraud Case Analysis

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Xerox Financial Fraud Case Analysis
Financial Research – The Xerox

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Financial Research Xerox Financial Fraud Case Analysis
This paper was prepared for Auditing Procedures

Financial Research – The Xerox Abstract On April 8th, 2002, the Xerox Corporation ("Xerox") announced its willingness to accept the U.S. Securities and Exchange Commission (SEC) to reach a settlement with the conditions. Thereafter, its financial fraud became surfaced. On June 28th, Xerox Corporation in accordance with the requirements of the settlement, submitted the unaudited 1997-2000 restated annual financial statements to the SEC, and recognized fraud interest income of $6.4 billion, pre-tax profit of $1.4 billion (SEC thought that should be $1.5 billion) during this period, which sparked an uproar in the capital markets. The financial fraud case of the Xerox and the World Communication (WorldCom) both became the hot issues after Enron’s scandal. This paper will introduce the Xerox Company and expand a detailed analysis with its

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mainly used financial fraud approach. Though reviewing this real case, we will better understand the importance of the strict auditing procedures for cash, receivables, inventory, payables, longterm debt, equity balances and related income statement accounts. Keywords: Xerox, financial fraud, SEC, auditing procedures

Financial Research – The Xerox Financial Research Xerox Financial Fraud Case Analysis

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Introduction of Xerox Xerox Corporation is a global document management company which manufactures and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies. Its headquarters is in Norwalk, Connecticut, the scope of its business throughout the United States and other 130 countries. The company's shares are traded on the New York Stock Exchange and the Chi cago Stock Exchange. In 2000, Xerox achieved a total income of $18.7 billion, and its earnings per


References: Xerox’s Accounting Scandal Recovery Tactics: Retrieved from http://i-sight.com/compliance/xeroxs-accounting-scandal-recovery-tactics/ Xerox’s history: Retrieved from http://www.xerox.com/about-xerox/history-timeline/enus.html A Fraud Case As Reported through SEC Documents: Retrieved from http://www.na-businesspress.com/JAF/JessupC_Web.pdf E. Rittenberg, Karla Johnstone, Audrey Gramling (2009). Auditing: A Business Risk Approach, 7th: South-Western College Morgensen, Gretchen. (2005). New York Times, KPMG Settles with S.E.C. on Xerox Audits U.S. SEC. (2006). AAER 2397, Administrative Proceeding File No. 3-12240. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53533.pdf U.S. SEC. (2006). AAER 2390, Administrative Proceeding File No. 3-12226. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53392.pdf U.S. SEC. (2006). AAER 2389, Administrative Proceeding File No. 3-12225. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53391.pdf U.S. SEC. (2006). AAER 2380, Administrative Proceeding File No. 3-12215. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-53344.pdf U.S. SEC. (2005). AAER 2350, Administrative Proceeding File No. 3-12120. Retrieved from: March 7, 2011 from www.sec.gov/litigation/admin/34-52878.pdf 8
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