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Essay / Research Paper Abstract
A 10 page paper discussing what went wrong in the auditing system at the height of the savings and loan scandal, specifically at Lincoln Savings and Loan Association. Better communication and greater accountability possibly could have prevented the Lincoln scandal; at least they could have prevented it from growing to the level it did. Auditors' independence proved to be independence from accountability. Any doubts would necessarily originate in the subjective realm, for the figures themselves would appear to be impeccable. The Lincoln scandal highlights the need for auditors to look beyond the obvious and perhaps to be less objective rather than more. Bibliography lists 9 sources.
Page Count:
10 pages (~225 words per page)
File: CC6_KSaudLincoln.rtf
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Unformatted sample text from the term paper:
business environment, organizations are called on as never before to do the right things, rather than only do things right. Nowhere is that more apparent than in auditing.
The purpose here is to examine what went wrong in the auditing system at the height of the savings and loan scandal, specifically at Lincoln Savings and Loan Association. Overview
Lincoln Savings and Loan was acquired in 1984 by six-year-old American Continental Corporation, which had been founded by then-attorney Charles Keating, Jr. in
1978. Keating made several promises to regulatory authorities in his application to acquire Lincoln, including retaining the Lincoln management team; "not to use brokered deposits to expand the size
of the savings and loan" (Knapp, 2003; p. 95); and retaining home loans as Lincolns primary business. After gaining control of Lincoln, Keating did exactly opposite of everything to
which he had committed as condition of acquiring Lincoln. Lincolns accounting was rather complex, but the complexity was designed into operations for purposeful
means. Without that complexity, Lincoln would not have been able to be as effective in creating paper profits that were not backed with actual transactions, as was the case
in the Garcia-Wescon sham in which Wescon acquired land at nearly twice its appraised value on behalf of E.C. Garcia and Company. In this single deal, Lincoln recorded "a
profit of $11.1 million on the transaction - profit that was never realized, since the savings and loan never received payment on the nonrecourse note" (Knapp, 2003; p. 96).
Had Lincolns accounting procedures been more straightforward, Keatings goals and the paths taken to achieve those goals would have been so blatantly obvious that its first auditor, Arthur Andersen, would
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