Synopsis Livent

Synopsis Founded by Garth Drabinsky and Myron Gottlieb, Livent Inc. was a live theatre company with outlets outlets in Toronto, ancouver, ancouver, !hica"o, and #ew $ork. $ork. In %&&', Livent(s )inances were *uestioned by an investment "roup led by +ollywood mo"ul Michael vit-. +e )ound out many systematic systematic irre"ularities irre"ularities that )looded the company(s accountin" records. S! was bothered with two si"ni)icant si"ni)icant evidences that contribute to the )raud. The )irst one was that Livent(s senior mana"ement manipulated the real )inancial data, usin" computer so)tware developed by Livent(s accountin" sta)). Due to this so)tware the Deloitte auditors, had a hard time to notice the )raud. The last one was the manner that Livent planned the )raud and how they have e/ecuted it. The independent auditors auditors o) Livent were censured )or not discoverin" the material misstatements in the )inancial report o) the company.  The )raud was was so common that that as independent independent auditors o) o) Livent this should should have noticed the indiscretions. Like the a""ressive nature o) the company, carelessness o) )inancial reportin" by company o))icials, abrupt increases in capital and transactions transactions with related parties. This should have been enou"h clues to the auditors to )ind out that there is a risk that Livent(s )inancial statements may contain material misstatements. misstatements. 0)ter unravelin" unravelin" this )raud, Drabinsky Drabinsky and Gottlieb were )ired. S! char"ed them with producin" )alse )inancial statements to make the company look more pro)itable than it actually was. Their trial started in 122' a)ter a lon" delay. Several witnesses admitted to their participation in the )inancial manipulation manipulation durin" the trial, but their reason )or doin" such action was because o) the Drabinsky and Gottleib(s orders. +owever, Drabinsky and Gottlieb denied the accusations and asserted that the )raud was done by their subordinates prior to their knowled"e. Drabinsky and Gottlieb(s attorneys *uestioned the reliability o) the witnesses( accusations accusations and ar"ued that the accountin" sta)) had bypassed the accountin" controls that Drabinsky made. The de)ence presented no witnesses and Drabinsky and Gottlieb did not testi)y. ventually in 122&, Drabinsky and Gottlieb were )ound "uilty o) )raud and )or"ery. 3oth Drabinsky and Gottleib were sentenced seven and si/ years in prison. 0round 12%%, the ntario !ourt o) 0ppeals reduced their sentences by two years each. The Institute o) !hartered 0ccountants o) ntario also )ound out that three three senior Deloitte 4 Touche Touche LL5 auditors were "uilty o) makin" errors durin" an audit o) Livent(s )inancial statements. 0ll three o) them were )ined 6%22 222 each.