Tyco in the Case Study Case Study

This was designed to limit the total amounts of insider selling for tax purposes. As time went by, Swartz used this program to give all employees loans for any reason. This helped Kozlowski and other executives to receive large loans from this program (that were forgiven in the future). ("Tyco," n.d., pp. 389 -- 402) (Farrell, 2011, pp. 442 -- 446)

The Impact of Auditors

Price Waterhouse Coopers was the auditor of Tyco. When the unauthorized loans were discovered they asked executives about them. but, they did not report their findings to regulators and investors. Instead, this was considered to be an issue of non-material significance (which allowed the fraud to continue). The combination of these factors is showing how the author is discussing the role of the different parties with the fraud. As a result, this is indicating what factors helped to make the scam continue for so long. This is the point that different parties were involved in Kozlowski's activities through: ignoring red flags and providing indirect assistance. ("Tyco," n.d., pp. 389 -- 402) (Farrell, 2011, pp. 442 -- 446)

Questions for Thought

What do you think Kozlowski's motivation for trying to avoid sales taxes on his art purchase was? Explain.Kozlowski was avoiding sales tax based on greed and arrogance. Greed is from his desire to boost his return on the paintings. If he avoided the sales taxes, this amount will be much higher (leading to greater price appreciation). At the same time, he was arrogant because he was able to get away with the fraud for so long. ("Tyco," n.d., pp. 389 -- 402) (Farrell, 2011, pp. 442 -- 446)

Explain the concept of comingling assets with the Tyco case.

The comingling of assets is when officers and board members will use the cash and property of the company as their own. This makes it more difficult to provide accurate financial reports based on the lack of transparency. Over the course of time, this will cause the company to lose money by not being able to account for spending and other programs. ("Tyco," n.d., pp. 389 -- 402) (Farrell, 2011, pp. 442 -- 446)

Would it have been possible for the board of directors to see the adjustments taking place in many different programs at Tyco? Explain.

Yes. The reason why, is because several board members had close associations with Kozlowski and one sold him property. This is a.....