Financial Reporting Problems at Molex‚ Inc. INTRODUCTION This report discusses Molex‚ Inc.’s conflicts with its auditor‚ Deloitte and Touche‚ over a reporting issue in 2004. The report explains the details of the firm’s issue while also addressing the intentions behind Molex’s decisions‚ Deloitte’s concerns‚ and the resolutions for the conflict. MOLEX’S PROBLEMS In mid-July 2004‚ Molex’s corporate finance group identified an on-going accounting issue within the firm: for several years‚ Molex had
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ratios‚ we believe Molex did in fact misstate the Balance Sheet and Income Statements for the period ending in June of 2004. In September‚ prior to making these errors public information‚ Molex released its yearly financials indicating it earned $175‚950‚000 in Net Income [Exhibit 2]. This numeric includes the overstatement to income of $5‚800‚000‚ after tax value‚ representing roughly 3.3% of the Net Income. The case describes how inventory is overvalued by $8 million‚ which would decrease Inventory
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1. Why does Molex have to hire external auditors? The major reason for firms to hire external auditors is to help the control of conflict of interest between firm managers‚ investors and shareholders. External auditors help you determine whether companies are in compliance with all applicable Internal Revenue Service rules. Under the Sarbanes-Oxley Act‚ a public company must hire an external audit team to review their accounting procedures and their financial statements. While internal auditor checks
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president and company controller have discussed this problem and the controller has mentioned this idea that if the company changed from LIFO TO FIFO it might be possible to maintain earning growth in 2008. He prepaid a memo to president explain how inventory flow assumption work and provides per forma income statement that show for one product adopting FIFO would allow Merrimack to report higher income in 2008 than it did in 2007 but higher income taxes would have to be paid. First Objective: The first
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Case: Molex 1. Molex is a global 1.84 billion dollar company that manufactures electronic components; the company is based in Chicago and is the world’s second largest manufacturer of electronic components. Although the company started as a local company‚ the vision of Molex was much greater. Molex now generates about 61 percent of its business from outside of the United States. Molex has stayed true to its set goal‚ which is to build a truly global company that is at home wherever in the world
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Financial Reporting Problems at Molex‚ Inc. (A) : . n mid-November 2004‚ Molex’s Board of Directors met to decide the future of Joe King and Diane Bullock‚ the company’s CEO and CFO respectively. Molex’s external auditors‚ Deloitte &c Touche‚ had accused both of failing to disclose an $8 million pre-tax inventory valuation error in a recent letter of representation to the auditors. In response‚ King and Bullock argued that at the time of their letter they had determined that the financial
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Global markets engage in an array of arenas. For Molex the challenges do not fall short. There are many advantages and disadvantages which include‚ but are not limited to: culture‚ government‚ taxes‚ lifestyle management‚ and costs. In the following paragraphs this manufacturer of electronics will be examined to review its global operations. Legality‚ culture‚ and ethics are a high priority for its success of being in the market for over 70 years. Today it holds presence in 21 countries employing
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Molex Case Study Shaquea K. King MGT/448 Global Business Strategies University of Phoenix Donald Joseph~Facilatitor March 24‚ 2010 The legal‚ cultural‚ and ethical challenge that confronts the global business presented with Molex is that of the HRM (Human Resources Management). Molex legal issues and concerns where making sure that all the legal polices and systems were covered because they were interacting globally and different countries abided by different rules and regulations
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Running head: MOLEX CASE STUDY Molex Case Study Global Business Strategies Molex Case Study Molex Molex is a global 1.84 billion dollar company that manufactures electronic components; the company is based in Chicago and is the world’s second largest manufacturer of electronic components. Although the company started as a local company‚ the vision of Molex was much greater. Molex now generates about 61 percent of its business from out side of the United States. Molex has stayed true to
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Why were you persecuted? Well‚ it all began with me sitting down with my family at the breakfast table munching on a piece of charred toast and guzzling down some milk‚ which was the very moment of when I heard the delicate sound of sirens coming from the east end of the street. My father’s face grew faint and my mother rapidly stood up and snatched my hand‚ as well as my brother’s. She then directed us towards the back of the house through a tiny break in the floor. Once we got to the hole‚ my
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