Jon Fries, Fletcher Anderson, Craig Schuster, and Catherine Sprauer played major roles in the case. Each one of them had important responsibilities as executives for F&C International, Inc. Jon Fries was the President, CEO and managing director of F&C International, Inc. He was in charge of the total management of the company. His key responsibilities were to align the company, internally and externally, with his strategic vision. His duties involved facilitating business outside of the company while guiding employees and other executive officers towards a central objective. As the CEO, he had high interaction with F&C`s independent auditors. Fries misguided them by creating false documents, mislabeling inventory, and undercutting the subordinates` attempts to expose the fraud. Fletcher Anderson was the Chief Operating Officer and member of company's board of directors. As the COO of the company, Anderson’s responsibilities included ensuring that the business operations were efficient and effective and that the proper management resources, distribution of goods and services to customers, and analysis of systems are conducted. Anderson later became the president and CEO of F&C International, Inc. As a COO, Fletcher had interaction with F&C`s independent auditors. Fletcher and controller was supposed to provide all the documents and answer all the questions requested of the independent auditors but they didn’t tell them about the fraud of the company. Craig Schuster served as the Chief Financial Officer of F&C International, Inc. He was responsible for managing the financial risks, financial planning, and record keeping of the company, as well as financial reporting for higher management. As the CFO, Schuster oversaw the preparation of and signed the company's registration statements filed with the SEC, including the company's Form 10-K reports. As a CFO, Craig Schuster had interaction was independent auditors but he did not tell them about the fraud of company. Finally, Catherine Sprauer a CPA who accepted the Accounting position oversaw the Management’s Discussion and Analysis (MD&A) section of F & C International, Inc. Later Sprauer became the Division Controller of F&C’s Flavor Division and helped prepare the MD&A sections of F&C’s periodic financial reports that were submitted to the SEC. Sprauer was informed by a couple of F&C’s employees about the intentions to overstated inventory and was given a list of executives that were involved. Sprauer also was informed about items that were affected by the fraud. Sprauer failed to inform her superiors, other accountants or the company’s independent auditors of the information. In conclusion the SEC criticized Sprauer, Anderson and Schuster for failing make sure that the F&C Financial reports that were filed were accurate. Anderson and Schuster were reprimand for having the internal controls in tact. They all pledged to “permanently cease and desist” from committing or causing violations of federal securities laws. Other senior executives were criticized for the fraudulent earnings scheme and pledge not to violate the federal securities law in the future as well. SEC fined the executives with civil fines up to $20k. F&C International, Inc filed for bankruptcy after the fraud went public and later the assets were brought by a competitor. Jon Fries was sentenced to 15 months in federal prison for his role in the fraud scheme. 1. Over time, There has been significant legislations passed, such as Sarbanes-Oxley, yet corporate fraud is still pervasive in today’s business environment. Suggest three ways that you believe will eradicate corporate fraud. Fraud takes motivation and opportunity without either one of these there will be no fraud. I would suggest the following ways to eradicate corporate fraud.
Set clear standards and reintegrate them periodically. This should be done at the beginning. Preparing and providing an manual and having each employee sign off stating...
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