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Issues Affecting Credit Rating Agencies

Competency, Trustworthiness of Ratings, and Conflicts of Interest Credit rating agencies have not been held accountable for their ratings.  Meaning, an inaccurate rating brings no repercussion to these agencies.  If one is not held accountable for their actions, logically there is less incentive to perform well or even at a high standard.  These agencies knew […]

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Credit Rating Agencies – Part One

What is a Credit Rating Agency and What Task Does it Perform? Since 1931, the United States government has encouraged or even required certain types of investors to use financial instruments or securities that have been rated high by rating agencies  (15 Chap. L. Rev. 139).  These agencies use available financial data, economic conditions, and […]

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How to Prevent Corporate Fraud

This is the fourth part in my series discussing corporate fraud. For more on this topic please read On Corporate Fraud Government Response to Corporate Fraud Types of Fraud Ultimately, all institutions should have a comprehensive fraud prevention program tailored to meet the needs of the organization. Fraud prevention programs should also include three prongs […]

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Types of Fraud

However, financial statement manipulation is simply on the edge of the fraud landscape. Much more common are asset misappropriations. The three basic types of asset misappropriations are skimming, larceny and fraudulent disbursements. Skimming and larceny occur when cash is taken directly from the employer, the difference between the two being that skimming occurs before the […]

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Government Response to Corporate Fraud

I next want to discuss the history of the governmental response and the more noteworthy commentary on corporate culture in the last thirty years. Although measures to prevent corporate crime were in effect before the 1980s, one of the more sufficient events was the formation of COSO in 1985. COSO is the Committee of Sponsoring […]

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On Corporate Fraud

Corporate fraud has always been one of the scourges of civilized society, although in the past decade we have witnessed unprecedented levels of greed in corporate culture. The past decade has been marred by Enron, WorldCom, Adelphia and many others, as fraud shrinks our economy by approximately six percent. Watchful eyes cannot be everywhere at […]

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S Corporation Reasonable Compensation

There are categories of business entities responsible for paying shareholder-employee reasonable compensation. An S Corporation[1] is one such corporation. An S Corporation is defined as a type of corporation that elects to be taxed under a section of the U.S. Internal Revenue Code. “S corporations must pay reasonable compensation to a shareholder-employee in return for […]

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Discharging Taxes in Bankruptcy – Part Four

General unsecured claims and penalty claims refer to those taxes that do not receive priority tax claim status. These types of claims are not entitled to secured, administrative tax claim (Armknecht). They do not qualify for priority tax claim status because of the nature of the claims; they are, in fact, old claims. Nonpecuniary tax […]

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Discharging Taxes in Bankruptcy – Part Three

Priority tax claims, as referenced in 11 U.S.C. 507(a)(8), include the following categories: Taxes measured by income or gross receipts Unsecured property taxes assessed prior to bankruptcy[1] Tax required to be collected or withheld “for which the debtor is liable in whatever capacity Certain employment taxes Certain excise taxes Certain customs duties Pre-petition interest on […]

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Discharging Taxes in Bankruptcy – Part Two

Secured claims are defined as those claims secured by a lien on the debtor’s property. The claim can only be secured “to the extent of the value of the property securing the claim. For example, a claim for $40,000 secured by a piece of property worth $10,000 would be a secured claim of $10,000 and […]

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