A company's CEO and a leading Board member give themselves large off-balance sheet personal loans at company expense, and then write-off the loans before year's end so they aren't disclosed anywhere in financial statements except in a footnote.
2006-11-16 06:11:08 · 8 answers · asked by Rosa 1 in Business & Finance ➔ Corporations
I think you should re-draft the question : what exactly is your question?
If this is an "off-balance sheet " loan , then it should not be shown on the balance sheet. So it is not necessary to write off the loans as suggested by you, as the loan never appear anywhere in the ledger and books of the company.
You may have misunderstood "off-balance sheet". If the company gives guarantee to a bank to advance a loan to the CEO, this is off-balance sheet. As the loan is not used by the company, so it is not recorded on the books of the company and any part of the financial statements except as a note.
The required accounting practise is to disclose the fact in a foot note.
2006-11-16 16:57:41 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Keep backup copies in a safe place. If authorities find out, they will blame anyone else but themselves. Accounting depatment would be the first they would blame.
2006-11-17 01:23:52 · answer #2 · answered by wizebloke 7 · 0⤊ 0⤋
Personally, if I was working there and saw that practice, I would look for another job.
This wasn't much of a question, but that's what I would do.
2006-11-16 06:13:40 · answer #3 · answered by Momma Jo 6 · 0⤊ 0⤋
Ever heard of Enron?
Coach
2006-11-16 06:18:14 · answer #4 · answered by Thanks for the Yahoo Jacket 7 · 0⤊ 0⤋
check if the loans are authorised and material.
2006-11-16 19:06:38 · answer #5 · answered by janicebks 3 · 0⤊ 0⤋
surely the bank account wont tally!!!
2006-11-16 06:13:57 · answer #6 · answered by Anonymous · 0⤊ 0⤋
except for being fraud, what is the question?
2006-11-16 06:15:03 · answer #7 · answered by Draquen 1 · 0⤊ 0⤋
OK and.......?
2006-11-16 06:12:37 · answer #8 · answered by Scorpio 4 · 0⤊ 0⤋