Knottyville Case
Knottyville Country Club: Asset Misappropriation
Srinivasan Ragothaman
LEARNING OBJECTIVES
After completing and discussing this case, you should be able to
Evaluate misappropriation risk factors
Evaluate internal controls
Design new control
Governance in non-profit sector
Analyze materiality decisions
Apply SAS 99, PCAOB AS5, and SAB 99
Perform cost benefit analysis
Knottyville Country Club: An Instructional Case on Asset Misappropriation
There was a stunned silence in the courtroom as the Circuit Judge was about to announce the sentence. “You are sentenced to 15 years in prison for grand theft. Your abominable conduct ran long and deep, and it is now time to pay for it,” said the judge. The judge also suspended an additional 25 years in prison time for Fancy Rockbottom. One of the members of the country club told Fancy that she was trusted as a family member by the patrons of the club and that trust was betrayed by Fancy.
Overview of the Club:
Knottyville Country Club (the Club) caters to the desires of its 1,800 dues-paying full members, 800 associate members and their guests. It also rents out its halls and ballrooms for weddings, reunions, and other gatherings. Built on the banks of the Missouri river, Knottyville Country Club offers a variety of exciting, fun-filled activities for its members. The Club was established in 1944 with a nine-hole golf course and an outdoor swimming pool. Since its opening, the Club has steadily continued to expand. It now (in 2007) has one of the most impressive 27-hole golf courses in the upper Midwest, six tennis courts, a spectacular clubhouse with lovely views, two swimming pools, an indoor basketball court, beautiful dining rooms with chandeliers, a restaurant, a bar and other opulent amenities. The Club facilities were in great demand and there was a six-month waiting time to book the halls for company picnics, banquets, family reunions, wedding receptions, and the like. There was also a
Srinivasan Ragothaman
LEARNING OBJECTIVES
After completing and discussing this case, you should be able to
Evaluate misappropriation risk factors
Evaluate internal controls
Design new control
Governance in non-profit sector
Analyze materiality decisions
Apply SAS 99, PCAOB AS5, and SAB 99
Perform cost benefit analysis
Knottyville Country Club: An Instructional Case on Asset Misappropriation
There was a stunned silence in the courtroom as the Circuit Judge was about to announce the sentence. “You are sentenced to 15 years in prison for grand theft. Your abominable conduct ran long and deep, and it is now time to pay for it,” said the judge. The judge also suspended an additional 25 years in prison time for Fancy Rockbottom. One of the members of the country club told Fancy that she was trusted as a family member by the patrons of the club and that trust was betrayed by Fancy.
Overview of the Club:
Knottyville Country Club (the Club) caters to the desires of its 1,800 dues-paying full members, 800 associate members and their guests. It also rents out its halls and ballrooms for weddings, reunions, and other gatherings. Built on the banks of the Missouri river, Knottyville Country Club offers a variety of exciting, fun-filled activities for its members. The Club was established in 1944 with a nine-hole golf course and an outdoor swimming pool. Since its opening, the Club has steadily continued to expand. It now (in 2007) has one of the most impressive 27-hole golf courses in the upper Midwest, six tennis courts, a spectacular clubhouse with lovely views, two swimming pools, an indoor basketball court, beautiful dining rooms with chandeliers, a restaurant, a bar and other opulent amenities. The Club facilities were in great demand and there was a six-month waiting time to book the halls for company picnics, banquets, family reunions, wedding receptions, and the like. There was also a