Exam 3 Parmalat Case Flashcards
What was Parmalat’s main problem
They had a non existing Bank of America cash account in the Cayman Islands
How much was in Parmalat’s fake cash account
4.9 Billion
What was the fraud that Parmalat committed
Over 15 years Parmalat falsified accounts and created assets to hide losses of $10 Billion in their Latin America operations
Management lied about repurchasing $3.6 Billion in bonds
Who was Parmalats auditor from 1990-1999
Grant Thornton
Who was Parmalats new auditor in 2000
Deloitte Touche Tohmatsu
What did Parmalat do to cover up their cash fraud?
They forged a Bank of America letter
When did Deloitte find Parmalats fraud
In 2003 when they were told about an “investment in an open ended mutual fund” that Parmalat could access at any time (this did not exist)
3 Red flags Deloitte should have picked up on
The size of the fake cash account
The “communication” from Bank of America was an easily forgeable fax
The large balances represented a significant portion of the company’s balance sheet (38% of it)
When did Parmalat file for bankruptcy?
December 2003
