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[answered] Assignment 3: Freescale Semiconductors, Inc. Review the Fre


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this is the 3rd big assignment and the last one, please check the attached file


Assignment 3: Freescale Semiconductors, Inc.

 

Review the Freescale Semiconductor case in your textbook. Prepare a twelve to twenty (12-20) slide PowerPoint presentation with speaker notes in which

 

you:

 

1. Give your opinion as to whether or not additional laws and harsher penalties on financial

 

fraud can eliminate or mitigate financial fraud. Support the rationale.

 

2. Suggest three (3) new strategies that you believe the government can implement to

 

eliminate or mitigate insider trading. Provide a rationale to support the suggestion.

 

3. In this case study, leaked merger and acquisition information was used to enable the

 

fraud. Determine the key internal controls needed over the communication of confidential

 

information to outside parties, and analyze the manner in which these controls act as a

 

deterrent to fraudulent activities.

 

4. Pretend you are Donna Murdoch in this case study and propose an alternative plan to act

 

on the leaked information. Next, recommend one (1) strategy to communicate the

 

alternative plan and determine whom the plan should be communicated with. Justify the

 

response.

 

5. In this case study, E&Y was providing a consulting service to The Blackstone Group

 

related to its planned acquisition of Freescale Semiconductor. Compare and contrast the

 

different auditor?s professional responsibilities between consulting engagements and

 

audit engagements.

 

6. Take a position on whether more legislative and/or regulatory agency oversight will

 

increase or decrease corporate fraud. Provide a rationale to support the position.

 

7. Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and

 

similar type Websites do not qualify as academic resources.

 

Your assignment must follow these formatting requirements: Apply APA standards to citation of sources No more than four (4) bullets per slide No more than six (6) words per bullet Headings:Times New Roman Font:36 Points Bullets:Times New Roman Font:24 Points Add bulleted speakers notes Include a cover page containing the title of the assignment, the student's name, the

 

professor's name, the course title, and the date. The specific course learning outcomes associated with this assignment are: Examine the various types of financial fraud and the auditor's responsibilities related

 

to fraud detection. Evaluate the legal environment for liability related to financial audits and the

 

proactive activities that a professional may take to prevent litigation. Use technology and information resources to research issues in auditing. Write clearly and concisely about auditing using proper writing mechanics. Grading for this assignment will be based on answer quality, logic / organization of the paper,

 

and language and writing skills, using the following rubric found here.

 

Grading for this assignment will be based on answer quality, logic / organization of the paper,

 

and language and writing skills, using the following rubric.

 

Points: 360 Assignment 3: Freescale Semiconductors, Inc.?

 

Unacceptable Fair Proficient Exemplary Below 70% F 70-79% C 80-89% B 90-100% A Did not submit or

 

incompletely gave

 

your opinion as to

 

whether or not

 

additional laws and

 

harsher penalties

 

on financial fraud

 

can eliminate or

 

mitigate financial

 

fraud. Did not

 

submit or

 

incompletely

 

supported the

 

rationale. Partially gave your

 

opinion as to

 

whether or not

 

additional laws and

 

harsher penalties

 

on financial fraud

 

can eliminate or

 

mitigate financial

 

fraud. Partially

 

supported the

 

rationale. Satisfactorily gave

 

your opinion as to

 

whether or not

 

additional laws and

 

harsher penalties

 

on financial fraud

 

can eliminate or

 

mitigate financial

 

fraud. Satisfactorily

 

supported the

 

rationale. Thoroughly gave

 

your opinion as to

 

whether or not

 

additional laws and

 

harsher penalties

 

on financial fraud

 

can eliminate or

 

mitigate financial

 

fraud. Thoroughly

 

supported the

 

rationale. Did not submit or

 

incompletely Partially suggested

 

three (3) new Satisfactorily

 

suggested three (3) Thoroughly

 

suggested three (3) Criteria 1. Give your opinion as

 

to whether or not

 

additional laws and

 

harsher penalties on

 

financial fraud can

 

eliminate or mitigate

 

financial fraud. Support

 

the ? ? rationale.

 

Weight: 10% 2. Suggest three (3) new

 

strategies that you believe the government

 

can implement to

 

eliminate or mitigate

 

insider trading. Provide a

 

rationale to support the

 

suggestion.

 

Weight: 15% suggested three (3)

 

new strategies that

 

you believe the

 

government can

 

implement to

 

eliminate or mitigate

 

insider trading. Did

 

not submit or

 

incompletely

 

provided a rationale

 

to support the

 

suggestion. strategies that you

 

believe the

 

government can

 

implement to

 

eliminate or mitigate

 

insider trading.

 

Partially provided a

 

rationale to support

 

the suggestion. new strategies that

 

you believe the

 

government can

 

implement to

 

eliminate or mitigate

 

insider trading.

 

Satisfactorily

 

provided a rationale

 

to support the

 

suggestion. new strategies that

 

you believe the

 

government can

 

implement to

 

eliminate or mitigate

 

insider trading.

 

Thoroughly

 

provided a rationale

 

to support the

 

suggestion. 3. Determine the key

 

internal controls needed

 

over the communication

 

of confidential

 

information to outside

 

parties, and analyze the

 

manner in which these

 

controls act as a

 

deterrent to fraudulent

 

activities. Did not submit or

 

incompletely

 

determined the key

 

internal controls

 

needed over the

 

communication of

 

confidential

 

information to

 

outside parties; did

 

not submit or

 

incompletely

 

analyzed the

 

manner in which

 

these controls act

 

as a deterrent to

 

fraudulent activities. Partially determined

 

the key internal

 

controls needed

 

over the

 

communication of

 

confidential

 

information to

 

outside parties;

 

partially analyzed

 

the manner in which

 

these controls act

 

as a deterrent to

 

fraudulent activities. Satisfactorily

 

determined the key

 

internal controls

 

needed over the

 

communication of

 

confidential

 

information to

 

outside parties;

 

satisfactorily

 

analyzed the

 

manner in which

 

these controls act

 

as a deterrent to

 

fraudulent activities. Thoroughly

 

determined the key

 

internal controls

 

needed over the

 

communication of

 

confidential

 

information to

 

outside parties;

 

thoroughly analyzed

 

the manner in which

 

these controls act

 

as a deterrent to

 

fraudulent activities. Did not submit or

 

incompletely

 

pretended you are

 

Donna Murdoch in

 

this case study and

 

did not submit or

 

incompletely

 

proposed an

 

alternative plan to

 

act on the leaked

 

information. Did not

 

submit or

 

incompletely

 

recommended one

 

(1) strategy to

 

communicate the

 

alternative plan and

 

determine whom

 

the plan should be

 

communicated with.

 

Did not submit or

 

incompletely

 

justified the

 

response. Partially pretended

 

you are Donna

 

Murdoch in this

 

case study and

 

partially proposed

 

an alternative plan

 

to act on the leaked

 

information.

 

Partially

 

recommended one

 

(1) strategy to

 

communicate the

 

alternative plan and

 

determine whom

 

the plan should be

 

communicated with.

 

Partially justified the

 

response. Satisfactorily

 

pretended you are

 

Donna Murdoch in

 

this case study and

 

satisfactorily

 

proposed an

 

alternative plan to

 

act on the leaked

 

information.

 

Satisfactorily

 

recommended one

 

(1) strategy to

 

communicate the

 

alternative plan and

 

determine whom

 

the plan should be

 

communicated with.

 

Satisfactorily

 

justified the

 

response. Thoroughly

 

pretended you are

 

Donna Murdoch in

 

this case study and

 

thoroughly

 

proposed an

 

alternative plan to

 

act on the leaked

 

information.

 

Thoroughly

 

recommended one

 

(1) strategy to

 

communicate the

 

alternative plan and

 

determine whom

 

the plan should be

 

communicated with.

 

Thoroughly justified

 

the response. Weight: 15% 4. Pretend you are

 

Donna Murdoch in this

 

case study and propose

 

an alternative plan to act

 

on the leaked

 

information. Next,

 

recommend one (1)

 

strategy to communicate

 

the alternative plan and

 

determine whom the plan

 

should be communicated

 

with. Justify the

 

response.

 

Weight: 15% 5. In this case study, E&Y

 

was providing a

 

consulting service to The

 

Blackstone Group related

 

to its planned acquisition

 

of Freescale

 

Semiconductor. Compare

 

and contrast the different

 

auditor???s

 

professional

 

responsibilities between

 

consulting engagements

 

and audit engagements. Did not submit or

 

incompletely

 

compared and

 

contrasted the

 

different

 

auditor???s

 

professional

 

responsibilities

 

between consulting

 

engagements and

 

audit engagements. Partially compared

 

and contrasted the

 

different

 

auditor???s

 

professional

 

responsibilities

 

between consulting

 

engagements and

 

audit engagements. Satisfactorily

 

compared and

 

contrasted the

 

different

 

auditor???s

 

professional

 

responsibilities

 

between consulting

 

engagements and

 

audit engagements. Thoroughly

 

compared and

 

contrasted the

 

different

 

auditor???s

 

professional

 

responsibilities

 

between consulting

 

engagements and

 

audit engagements. Did not submit or

 

incompletely took a

 

position on whether

 

more legislative and

 

/ or regulatory

 

agency oversight

 

will increase or

 

decrease corporate

 

fraud. Did not

 

submit or

 

incompletely

 

provided a rationale

 

to support the

 

position. Partially took a

 

position on whether

 

more legislative and

 

/ or regulatory

 

agency oversight

 

will increase or

 

decrease corporate

 

fraud. Partially

 

provided a rationale

 

to support the

 

position. Satisfactorily took a

 

position on whether

 

more legislative and

 

/ or regulatory

 

agency oversight

 

will increase or

 

decrease corporate

 

fraud. Satisfactorily

 

provided a rationale

 

to support the

 

position. Thoroughly took a

 

position on whether

 

more legislative and

 

/ or regulatory

 

agency oversight

 

will increase or

 

decrease corporate

 

fraud. Thoroughly

 

provided a rationale

 

to support the

 

position. No references

 

provided Does not meet the

 

required number of

 

references; some or

 

all references poor

 

quality choices. Meets number of

 

required references;

 

all references high

 

quality choices. Exceeds number of

 

required references;

 

all references high

 

quality choices. Serious and

 

persistent errors in

 

grammar, spelling,

 

punctuation, or

 

formatting. Partially free of

 

errors in grammar,

 

spelling,

 

punctuation, or

 

formatting. Mostly free of errors

 

in grammar,

 

spelling,

 

punctuation, or

 

formatting. Error free or almost

 

error free grammar,

 

spelling,

 

punctuation, or

 

formatting. Lack of in-text

 

citations and / or

 

lack of reference

 

section. In-text citations and

 

references are

 

provided, but they

 

are only partially

 

formatted correctly

 

in APA style. Most in-text

 

citations and

 

references are

 

provided, and they

 

are generally

 

formatted correctly

 

in APA style. In-text citations and

 

references are error

 

free or almost error

 

free and

 

consistently

 

formatted correctly

 

in APA style. Weight: 10% 6. Take a position on

 

whether more legislative

 

and / or regulatory

 

agency oversight will

 

increase or decrease

 

corporate fraud. Provide

 

a rationale to support the

 

position.

 

Weight: 10% 7. 2 references (or

 

number in the

 

assignment)

 

Weight: 5% 8. Writing Mechanics,

 

Grammar, and

 

Formatting

 

Weight: 5% 9. Appropriate use of APA

 

in-text citations and?

 

reference section

 

Weight: 5% 10. Information

 

Literacy/Integration of

 

Sources

 

Weight: 5% Serious errors in

 

the integration of

 

sources, such as

 

intentional or

 

accidental

 

plagiarism, or

 

failure to use in-text

 

citations. Sources are

 

partially integrated

 

using effective

 

techniques of

 

quoting,

 

paraphrasing, and

 

summarizing. Sources are mostly

 

integrated using

 

effective techniques

 

of quoting,

 

paraphrasing, and

 

summarizing. Sources are

 

consistently

 

integrated using

 

effective techniques

 

of quoting,

 

paraphrasing, and

 

summarizing. Information is

 

mostly clear and

 

generally supported

 

with reasons and

 

evidence that

 

logically support

 

ideas. Information is

 

provided in a clear,

 

coherent, and

 

consistent manner

 

with reasons and

 

evidence that

 

logically support

 

ideas. ? 11. Clarity and

 

Coherence of Writing

 

Weight: 5% Information is

 

confusing to the

 

reader and fails to

 

include reasons and

 

evidence that

 

logically support

 

ideas. Information is

 

partially clear with

 

minimal reasons

 

and evidence that

 

logically support

 

ideas. ? CASE 9.1 Freescale Semiconductor, Inc.

 

Who will guard the guardians?

 

Juvenal

 

During the summer of 2006, a syndicate of investors led by The Blackstone Group, one of Wall

 

Street?s largest private equity investment firms, initiated a secret plan to acquire Freescale

 

Semiconductor. Based in Austin, Texas, Freescale is among the world?s largest producers of

 

semiconductors and for decades was a subsidiary of Motorola, Inc., the large electronics

 

company. In July 2004, Motorola spun off Freescale in one of that year?s largest initial public

 

offerings.

 

Blackstone retained Ernst & Young (E&Y) to serve as a consultant for the planned buyout of

 

Freescale. Among other services, Blackstone wanted E&Y to review Freescale?s human resource

 

functions and to make recommendations on how to streamline and strengthen those functions

 

following the acquisition. James Gansman, a partner in E&Y?s Transaction Advisory Services

 

(TAS ) division, was responsible for overseeing that facet of the engagement.

 

Similar to the other Big Four accounting firms, E&Y became involved in the investment banking

 

industry during the 1990s. In fact, by the late 1990s, the small fraternity of accounting firms

 

could boast of having two of the largest investment banking practices in the world, at least in

 

terms of the annual number of consulting engagements involving merger and acquisition (M&A) deals. In 1998, KPMG consulted on 430 M&A transactions, exactly one more than the number of

 

such engagements that year for PricewaterhouseCoopers (PwC). Despite those impressive

 

numbers, KPMG and PwC had not established themselves as dominant firms in the investment

 

banking industry.

 

In 1998, the total dollar volume of the M&A engagements on which KPMG and PwC consulted

 

was $1.65 billion and $1.24 billion, respectively. Those numbers paled in comparison to the

 

annual dollar value of M&A transactions for industry giants such as Goldman Sachs, which was

 

involved in M&A deals valued collectively at nearly $400 billion in 1998. At the time, Goldman

 

Sachs, Lehman Brothers, Morgan Stanley, and the other major investment banking firms

 

consulted exclusively on ?mega? or multibillion-dollar M&A engagements. By contrast, the ?low

 

end? of the M&A market-in which the Big Four firms competed?typically involved transactions

 

measured in a few million dollars.

 

E&Y?s involvement in the huge Freescale M&A deal was a major coup for the Big Four firm.

 

When the transaction was consummated in December 2006, the price paid for the company by

 

the investment syndicate led by The Blackstone Group approached $18 billion. That price tag

 

made it the largest private takeover of a technology company to that point in time as well as one

 

of the ten largest corporate takeovers in U.S. history.

 

Not surprisingly, Blackstone demanded strict confidentiality from E&Y and the other financial

 

services firms that it retained to be involved in the planned acquisition of Freescale. James

 

Gansman, for example, was told that Blackstone wanted the transaction to be ?super

 

confidential? and was instructed in an internal E&Y e-mail to ?not breathe the name of the target

 

[Freescale] outside of the [engagement] team.?1

 

During June and July 2006 while he was working on the Freescale engagement, Gansman passed

 

?inside information about the pending transaction?2 to Donna Murdoch, a close friend who

 

worked in the investment banking industry. An FBI investigation revealed that Gansman and

 

Murdoch ?communicated over 400 times via telephone and text messages?3 in the weeks leading

 

up to the September 11, 2006, announcement that the Blackstone investment syndicate intended

 

to acquire Freescale. In that time span, Murdoch purchased hundreds of Freescale stock options,

 

which she cashed in on September 11?12, 2006, realizing a windfall profit of $158,000.

 

The FBI also determined that between May 2006 and December 2007 Gansman provided

 

Murdoch with information regarding six other M&A transactions on which E&Y consulted. In

 

total, Murdoch used that inside information to earn nearly $350,000 in the stock market.

 

Murdoch gave that information to three other individuals, including her father, who also used it

 

to produce significant stock market profits.

 

Published reports indicate that Murdoch became involved in the insider trading scheme to help

 

make the large monthly payments on a $1.45 million subprime mortgage on her home. The funds

 

she initially used to ?play the market? were provided to her by one of the individuals to whom

 

she disclosed the inside information given to her by James Gansman. In addition, Gansman at

 

one point loaned her $25,000. The Securities and Exchange Commission (SEC) uses sophisticated software programs to detect

 

suspicious trading activity in securities listed on stock exchanges. In early 2007, the SEC placed

 

Murdoch on its ?watch list? of individuals potentially involved in insider trading and began

 

scrutinizing her stock market transactions. Information collected by the SEC resulted in criminal

 

charges being filed against Murdoch. In December 2008, she pleaded guilty to 15 counts of

 

securities fraud and two related charges.

 

In May 2009, Murdoch served as one of the prosecution?s principal witnesses against Gansman

 

in a criminal trial held in a New York federal court. During the trial, Gansman testified that he

 

had been unaware that Murdoch was acting on the information he had supplied her. Defense

 

counsel also pointed out that Gansman had not personally profited from any of the inside

 

information that he had been privy to during his tenure with E&Y. Nevertheless, the federal jury

 

convicted Gansman of six counts of securities fraud. A federal judge later sentenced him to a

 

prison term of one year and one day

 

(Rittenberg)

 

Rittenberg, Johnstone, Gramling. ACP Auditing: A Business Risk Approach with Cases, 8th ed

 

(CUSTOM), 8th Edition. Cengage Learning. VitalBook file.

 


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