Tangoe Inc., a Securities and Exchange Commission, faced charges of fraud back in 2018. This company deals with information technology all over the world. In these charges, the company was accused of misleading its investors. The company deceived these people using accounting in that it could record the revenues from incomplete work, increasing its revenues. The officials in this company also faced charges as they had violated some laws involved.
Some years back, it had been noted that there existed some financial statements which were quite misleading, and this information negatively affected the company. It faced a drop in its stock at approximately 9-10%. This brought the need that the company had to give new statements for the past three years. The company was subjected to a situation where it could lose its registration if the stocks dropped further.
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Executives in Tangoe Inc. also faced accusations that they did not give legit revenue statements; they issued short term loans and gave false accounts on the same. Nevertheless, the company faced allegations that it accounted for transactions that did not have benefit in any way.
CPA Firm’s Audit Report Analysis
As found by the auditor, Tangoe Inc. company had no straight financial documents which insinuated lack of proficiency. As anticipated by those in an audit report analysis, a financial report must bear with it the confidence of its investors (Aobdia, & Shroff, 2017). It was now clear that the company had to take up its responsibilities seriously by acknowledging the blunders it had made concerning their financial statements. The report made sure that this happened. This brought the company no good since as a result, it lost most of its investors. There were instructions that the company was not to decide on anything based on the previous financial statements.
Legal Liability to the third party
Tangoe Inc. Company had issued false financial statements. As a result, their legal liabilities were legitimized. This happened under company laws. The laws states that the falsified financial statements by the company become an obligation as the company deceived its investors. This is the first liability. Secondly, the directors neglected their work since they were not keen on the financial laws of the company.
Nevertheless, the company could not offer appropriate documentation, a sign of failure on what was expected from it. Investors in this company were completely off the hook as they were presented with these false statements. This affected the decisions made by the company.
Under these liabilities, there were actions that followed as a result of these actions by the company. Such liabilities can have negative impacts on the company.
This company issued falsified financial statements, and the company had to face legal actions. As a result, the company lost its investors and remained with no good reputation. Investors should be subjected to appropriate financial statements to help them make the right decisions and avoid experiencing any loss.
GAAS Statement that the company violated
Tangoe Inc. Company gave falsified financial statements. GAAS found these allegations to be true based on the evidence they had. SEC, on the other hand, unveiled that the company was performing poorly in stock market scale and that the investor’s needs were not met in the company. Directors and auditors in Tangoe Inc. failed to carry out their roles and obligations in the company professionally.
Who to bear the most significant burden between the management and the auditor for the financial reporting
In Tangoe Inc. Company, auditors, had less responsibilities as compared to management. The management decides on how these reports are issued or presented. The director in Tangoe gave the idea that these false statements were to be presented. GAAS expects the auditors to practice honesty in their work.
Management sees to it that the auditors are on the right track and the financial statements given can be relied on. In our case, management failed to make sure that the financial statements by the auditors were correct. Management also took part in the presentation of falsified financial statements to the investors. Management carries with it the greatest burden.
Actions that PCAOB should take on the audit firm to hold them accountable for the accounting irregularities
Tangoe Inc. Company was to face the consequences of their actions in their presentation of falsified financial statements due to their fraudulent practices in accounting. PCAOB should regulate the firm that carried out an audit. This company’s license should be annulled to audit, which will make sure that these audit firm and others take no part in such activities. False auditing should be punishable in case a firm has played a part.
Investors such as those in this company are faced with damages as they face deception. In this, the company should be responsible of its actions and pay these investors on reparations done. On the other hand, any director involved in such activities should have the job taken away and also take part in the payment of damages done. By PCAOB doing so, the interests of the investors in the company will be safeguarded, and such actions will be rare in companies, seeing to it that there are no mistakes done.
References
Aobdia, D., & Shroff, N. (2017). Regulatory oversight and auditor market share. Journal of Accounting and Economics , 63 (2-3), 262-287.
Boo, E. F., & Sharma, D. (2008). Effect of regulatory oversight on the association between internal governance characteristics and audit fees. Accounting & Finance , 48 (1), 51-71.
