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The Defrauding cases at Phosphagenics

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The Defrauding cases at Phosphagenics

Category: Case Study

Subcategory: Accounting

Level: University

Pages: 1

Words: 275

The Defrauding cases at PhosphagenicsName
Institutional Affiliation
The fraud committed Ogru, Jiang, and Gianello had no big impact on the financial stability and position of Phosphagenics Limited if the assets, cash flows, and the profitability is considered in the short term. The defrauded amounts were charged at the income statements as the invoices sent were for the services rendered (DPP v Gianell). From the income statement, the firm only made a net profit in 2008 and in 2011 inferring that the operating costs were high. In terms of the sustained losses, the fraud posed a significant threat towards the collapse of the firm. From the balance sheet, the firms share capital increased from $134,731,137 to $209,895,000 in 2013 (Gardner, 2014). The total amount defrauded forms 2.85% indicating that the amount was insignificant and did not pose a substantial threat towards the continuance of operations of Phosphagenics Limited. In terms cash flows left at the end of the year from 2004-2008, the defrauded amount totaled to $1,087,812 while the cash flows at the same period were $58,446,969. The amount lost was approximately 2% of the cash flows. The risks of collapse posed by the loss are too low at 2%. The loss, however, reduced the amounts attributable to the shareholders as dividends. It reduces the profit before interests and taxes and consequently the net profits.
The fake invoices inflated the sundry expenses as most of the expenditures alleged to have been rendered…

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