The Anti-Fraud Collaboration has developed six short video vignettes for use with the LDC Cloud Systems Case Study. In each vignette, actors reenact several interactions selected from the case study.
The videos, which can also be found on YouTube, do not provide information beyond that found in the case. Rather, they aim to enable discussion participants to see certain material in a new light and allow the discussion leader to emphasize certain aspects of the case in the classroom.
SCENE 1: CONVERSATION BETWEEN SCOTT TENSAR AND FILIPPE ARIZMENDI
REENACTMENT: PAGE 5 OF CASE STUDY
This conversation highlights Internal Audit Head Scott Tensar’s concern that he needs more staff to keep up with the growth in the company. In an effort to sign deals, the sales department is offering unique terms and conditions for each client, and Tensar is challenged to keep up with designing and implementing proper internal controls for these new contractual arrangements. The CFO seems to understand Tensar’s dilemma, and notes that he, too, could use an additional accounting policy expert, but any expansion of staffing levels will have to wait.
SCENE 2: CONVERSATION BETWEEN LATHAM ASPER AND LESTER DARNAL
REENACTMENT: PAGE 6 OF CASE STUDY
In this conversation, Audit Partner Latham Asper is asking Audit Committee Chair Lester Darnal if he has seen—and if he is concerned with—signs of stress in LDC’s accounting team.
SCENE 3. LDC EXECUTIVE TEAM MEETING
REENACTMENT: PAGE 7 OF CASE STUDY
In an executive team meeting, CEO Shep LeDuc offers insight into the culture he has set at LDC. He has high expectations for himself and the staff, and is not concerned that everyone is working long hours. He has set aggressive growth goals for the company and expects everyone to keep pace with what is needed to ensure that growth. He expresses concern that CFO Arizmendi’s team is not keeping up with all of the new deals because they cannot figure out the accounting. He calls out General Counsel Trela for not pushing through legal contracts quickly enough.
SCENE 4: CONVERSATION BETWEEN ROSS TRELA AND BEVERLY SHEEL
REENACTMENT: PAGE 8 OF CASE STUDY
In this conversation, Beverly Sheel is updating Ross Trela on her investigation. She has uncovered a payment of $20,000 to a consulting firm that is controlled by the family of a government official, and as such, the payment may be perceived as a bribe for building permits in LDC’s Asian operations. In addition, she recognizes that an expense of that type and size would not have been caught by the company’s ICFR.
SCENE 5: CONVERSATION BETWEEN FILIPPE ARIZMENDI AND ROSS TRELA
REENACTMENT: PAGE 6 OF CASE STUDY
This scene is created based on facts and circumstances presented in the case, primarily from the information provided in the “Culture” section on page 6 of the case study. It is not an actual conversation presented in the case.
In this scene, CFO Filippe Arizmendi is expressing concern to General Counsel Ross Trela that the accounting team is working extremely hard to make sure that the accounting department will be able to correctly recognize revenue on the myriad terms and conditions that the sales function is offering to close deals in order to meet growth targets. There is stress in all parts of the business, coupled with a recognition that everyone is supposed to “do the right thing.” However, there is an underlying current from above that LDC not miss out on the chance to be something special.
SCENE 6: CONVERSATION WITH ROSS TRELA, LATHAM ASPER, AND LESTER DARNAL
This scene is not taken verbatim from the case, but does communicate some of the concerns that are raised in “The Board Meeting” section of the case study (on pages 9 and 10).
The three men are prepping for the upcoming board meeting where they will discuss the accounting information discovered in the email that has the potential to result in a restatement of prior period financial statements. CEO Shep LeDuc has been asked to sit out this board meeting so that the board can have a candid discussion about the situation at LDC.