Fraud Analysis of ZZZZ Best: Management, Risk Appetite, and Board of Directors Oversight

Connecting Risk Management Concepts to a Recent Fraud Case

For the analysis of fraudulence in terms of management, philosophy, risk appetite, and tolerance, the company ZZZZ Best was chosen. It is an organization that provides its customers with carpet cleaning services. ZZZZ Best was established in 1982 by Barry Minkow and assumed schemes for extreme fraudulence, which gave company owners more than 100 000 000 dollars (Basilicato, 2019, 00.03.30).

Due to the reason of obtaining significant debts, Barry decided to “perpetrate a restoration fraud… and I had to fool accountants and auditors into believing that those numbers were real (Basilicato, 2019, 00.03.50). Notably, the author of the business also explained to banks and accountants that he needed so much money to make restorations of buildings that were damaged by flood or fire (Basilicato, 2019, 00.03.30). Given these factors, it is possible to consider the relation of the main character and his deeds to such aspects as management, philosophy, and others.

First, while exploring Minkow’s management, one should state that he had a plan of action and clearly identified and understood what he was doing. In other words, he was conscious of his deeds and elaborated a step-by-step strategy of how-to cheat accountants and clients using this action plan. Second, one can state that Minkow’s philosophy was based on the conscious ignoring of the situation’s worsening while lying to accountants.

Third, the two above-mentioned factors stress the leader’s extreme risk appetite. Minkow highlights that he borrowed various instruments until he was millions of dollars in debt (Basilicato, 2019, 00.04.00). Finally, Minlow had appropriate tolerance while conducting his business. In other words, he was passionate and calm while observing how his debts were growing and the danger factor was increasing.

The Board of Directors’ Role in Preventing and Addressing Organizational Fraud

Remarkably, the role of BOD is crucial and can significantly influence the chance of successful fraudulence. For example, in the course book, the authors Anderson et al. (2017) state that there is a point in exercising board risk oversight, which highlights that BOD carries out bankruptcy governance to allow businesses to achieve their goals and strategies (Anderson et al., 2017). Moreover, BOD should minimize adverse effects while conducting appropriate management decisions (Anderson et al., 2017). Therefore, in the case of ZZZZ Best, BOD played a significant role in identifying potential issues and in helping the leader to follow his fraud purposes.

References

Anderson, U., Head, M. J., Ramamoorti, S., Riddle, C., Salamasick, M., & Sobel, P. (2017). Internal auditing: Assurance & advisory services. Internal Audit Foundation.

Basilicato, S. (2019). Cooking The Books – What Every Accountant Should Know – Video 1. [Video], YouTube. Web.

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StudyCorgi. (2025) 'Fraud Analysis of ZZZZ Best: Management, Risk Appetite, and Board of Directors Oversight'. 29 March.

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StudyCorgi. "Fraud Analysis of ZZZZ Best: Management, Risk Appetite, and Board of Directors Oversight." March 29, 2025. https://studycorgi.com/fraud-analysis-of-zzzz-best-management-risk-appetite-and-board-of-directors-oversight/.

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StudyCorgi. 2025. "Fraud Analysis of ZZZZ Best: Management, Risk Appetite, and Board of Directors Oversight." March 29, 2025. https://studycorgi.com/fraud-analysis-of-zzzz-best-management-risk-appetite-and-board-of-directors-oversight/.

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