The audit case with the highest compensation amount in the history of the United States - the audit case of *** Tong Fund Management Co., Ltd. Audit case introduction *** Tong Fund Management Co., Ltd. (referred to as *** Tong Company) has a scale of approximately US$500 million. The boss of the company

It's Cornford.

McCandy King (King for short) is the boss of King Resources Company (King for short) and a billionaire.

In early 1968, Cornford and King's Company began to cooperate and reached the Agabulco Agreement, that is, the two companies will purchase oil and natural gas industries from King's Company and set up a natural resource capital account (referred to as the resource account) to specifically

manage these investments.

Although the two parties did not sign any formal contract, it was clearly recorded in the minutes of the board of directors meeting of the same company that "Kim Company will provide natural resource industries for the planned natural resource capital account and provide them with normal resources."

These sales prices will be more favorable than those given to more than 200 buyers from industry or other industries."

A manager of the same company also confirmed the core content of the agreement, that is, Jinshi Company will sell the natural resource industry to the same company at the cost price. The cost price includes the management expenses incurred when acquiring the property and reasonable compensation.

Profit margins, these profit margins are generally about 7 to 8%.

Initially, Cornford agreed to buy about $10 million worth of oil and gas properties from King.

However, by the end of 1969, the smooth-talking Kim persuaded the managers of the same company to purchase oil and natural gas industries worth more than US$100 million from his company.

The misfortune finally befell *** and the shareholders of the company.

In these transactions, Kim did not fulfill the Agabulco Agreement.

According to subsequent court investigations, Kim frequently bought cheap oil and gas properties and then sold them to foreign companies at exorbitant prices, sometimes for more than 30 times the original cost.

A few years later, the continued decline in stock prices and the inferior natural resources sold by Kim's company to the Japanese company forced the huge Japanese company into bankruptcy.

***The liquidation of the same company triggered a large-scale civil litigation dispute.

One of the main defendants is the accounting firm Arthur Andersen.

They once provided audit services for both *** Tong Company and King's Company.

The person who sued Arthur Andersen was John Orr, the trustee for the bankruptcy liquidation of the same company, and he was a partner of the accounting firm Tatch Ross.

John sued Arthur Andersen for failing to disclose to *** the company's managers information that the company had been defrauded by King's Company.

When the trial result was announced, Arthur Andersen became the victim of the largest compensation ever awarded to an accounting firm in the United States.

1. Dual relationships between Arthur Andersen Accounting Firm and *** Tong Company and Kim Company Three offices of Arthur Andersen Accounting Firm participated in the annual financial statement audit business related to *** Tong Company.

The Geneva Office pays special attention to the audits of different companies based on their size, characteristics and complexity.

The New York office is responsible for signing the audit engagement letter.

He also signed the audit report for the company's annual financial statements and took responsibility for the audit results.

The Denver office plays an important role in the audit of foreign companies.

Its auditors conduct extensive audit procedures annually at the request of partners in the New York office to confirm the accuracy of the year-end balances of resource accounts. In addition, the Denver office also performs audits of King & Co., headquartered in Denver.

Not only that, the partners and senior managers responsible for King's firm's audit were also responsible for overseeing the audit of ***'s resource accounts for the same firm.

A key issue raised in the lawsuit filed by *** Company's bankruptcy trustee against Arthur Andersen is whether the firm knew that *** Company paid an exorbitant price when it purchased property from King's Company.

Evidence gathered in court showed that auditors at Arthur Andersen's Denver office did know that the company's resource accounts were actually managed by King's.

The audit work papers also specifically stated that King's Company has "absolute discretion to purchase oil and natural gas properties" for resource accounts.

The Denver office also has complete freedom to review relevant information such as the cost and profit margin of the natural resource industry sold by King's Company to the same company.

Another major issue in the lawsuit is when Arthur Andersen's auditors learned that *** and other companies were purchasing oil and natural gas properties from King's Company at high prices.

The time when Arthur Andersen Certified Public Accountants issued an audit report to *** Company's 1968 financial statements was February 5, 1969.

Therefore, the court is particularly interested in finding out what the firm knew about the price of natural resource industry transactions between the two companies as of this day. The last issue involved in the lawsuit is what Arthur Andersen knew and was involved in the transaction.

How many so-called revaluation transactions were entered into by King's Company for other companies? Evidence shows that many of the revaluation transactions arranged by King's Company were fraudulent.

For example, on at least two occasions, King claimed to have found a third party willing to purchase a small stake in the oil and gas industry belonging to either the same company or King at a price well above fair market value.

Fractional ownership.