Case 3- Parmalat: Can You Sue Over Spilled Milk? (30 points) Read \"Parmalat: Ca
ID: 360812 • Letter: C
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Case 3- Parmalat: Can You Sue Over Spilled Milk? (30 points) Read "Parmalat: Can You Sue Over Spilled Milk, pages 361-370 in Understanding Business Ethics. Thoroughly answer the questions that follow the Case Summary below. Case Summary The Parmalat case is a classic example of how the founders of the firm believe that they are entitled to the financial benefits of the firm, regardless of whether they are entitled to the benefits or not. On many points, the Parmalat case is similar to the Adelphia case. The grand matriarch of the firm presides over the decisions, which are completely intertwined with the personal benefits given to himself and his family. Calitso Tanzi inherited Parmalat in 1961 and quickly started expanding the commercial reach of Parmalat As is almost always the case with financial fraud, questions start to arise when the firm has cash flow problems and/or problems with the releasing of their financial statements. This is certainly the case with Parmalat which had reported high levels of debt and high cash reserves. It does not 607-22-4Explanation / Answer
1. the owners comes in the stakeholders list, it is the same in this case also. the stakeholders includes owners, stock market, Deloitte, the government agencies and regulatory bodies which provide information to Deloitte.
the focus os only on the benefit of owners, but not the benefit of any other stakeholder in this regards. the top managemnt only focused on benefits of owners, for that only they created huge amoung of money as reserves which it does not have really, at the same time they liquidated it to encash it. by doing this the owners can transfer the fund from reserves to assets (they acquired some fixed asset). their motive is release the fund from reserves to common purpose.
2. the US market may not focused on its financial position reveals to others. or they may thought that it is doing good, and there wont be any problems. or no stakeholder is filed a case or any ethical violation against this firm.
3. it is a kind of blaming others for our mistake. it is the same in this case, Patamat was filed a case against Deloitte, the reason they are saying is the preparation of audit is not done well. hence they blame Deloitte firm and sued for some meny. it is not correct, they violated regulations, make many mistakes, lost the trust of investors, and finally they blame others for it.
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