Peregrine Systems Fraud Essay example -- Business Case Studies Account

fluid Systems accounting Fraud breakwater Streets demand for high growth motivated Peregrine Systems executives, to fraudulently inflate revenues and seam prices. According to the SEC, Peregrine filed materially wrong monetary statements with the commission for 11 consecutive quarters. Steven Spitzer, a member of Peregrines gross revenue team admitted to meeting regularly with senior guidance near the closed avow of the quarter to determine how much revenue was needed to exceed Wall Streets expectations. The primary fraud committed by Peregrine was done by inflating revenue by schedule revenue when sales never occurred. By recognizing revenue from sales that never occurred, the accounts receivable balance and net income were fraudulently overstated the accounts receivable would never be collected, because the merchandise was never sold. To entomb up their high, outstanding, accounts receivable balance as a result of booking sales that did not occur, Peregrine fraudulentl y engaged in financial agreements with banks. Evidently, Peregrine Systems increased its revenues by pressuring distributors and resellers to build up their inventories (known as place their inventory). Through secret side or oral agreements Peregrine distributors and resellers were not obligated to pay Peregrine for their software inventories. This conduct obviously became a problem. If they could not sell Peregrines software, they would receive their money back. According to GAAP, revenue reference on the sale of software requires evidence that an arrangement essential exist, economy must have occurred, vendors fees must be fixed or determinable, and collectibility must be probable before recognizing revenue. Peregrine incorrectly recorded this tra... ... tempted to falsely inflate earnings is to take away their personal gains, if the companys stocks go up. I believe that when upper level management has too much motivator based on personal financial gain, which is d irectly based on the performance of the company it compromises their judgments. I think that upper level management should not be allowed to receive stock options or to even own stock in the company as the financial statements would provide a neutral, bias-free report. Management would have no reason to cook the books. I in like manner feel that any management who still decides to falsify documents needs to be held more accountable for their actions and receive tougher punishments. I think that these strict guidelines would jockstrap the people in the United States and people all over the beingness feel more confident in investing their money into the stock market.