Academic journal article Journal of Accountancy

Ohio Trial Court Rules for Accounting Firm

Academic journal article Journal of Accountancy

Ohio Trial Court Rules for Accounting Firm

Article excerpt

In a case involving the embezzlement of approximately $300,000 of funds, an Ohio trial court ruled an accounting firm that performed review services was not responsible for detecting the embezzlement.

The matter began when a bookkeeper working for F. C. Biebesheimer & Sons stole approximately $300,000 over a period of several years by writing payroll checks to nonexistent employees and then inflating accounts receivable in order to hide the theft.

Weber and Co. performed only review services for Biebesheimer. During an analytical review, Weber found accounts receivable turnover and receivables as a percentage of sales were outside industry standards and alerted the Biebesheimer president. The president said in his opinion the receivables were collectable.

As a result of these inquiries, Weber did not perform additional testing of receivables but did document in its workpapers both its concerns about the receivables and its conversations with the company president.

After the embezzlement was detected, Biebesheimer sued Weber, arguing that Weber should have expanded its review procedures based on the analytical review results. …

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