In approx. 1962, Robert.F.

Doughtie, founder of the now-famous Doughtie's Barbeque, expanded his food service business into a publicly owned food products company headquarted in virginia.
In the late 1970s , William Nashwinter was appointed as a salesman with doughties foods inc.

Very soon he impressed his superiors, and was promoted as the general manager of the gravins division* of doughties .
Nashwinter discovered that managing a large warehouse was much more complicated & stressful than working as a salesman.

 He was often remarked by corporate headquarters for his poor performance .

After a lot of criticism for failing to meet the targeted profit goals , William Nashwinter decided to take the matters into his own hands. The young manager began to record fictitious inventory on his monthly performance reports to the headquarters . He raised his monthly inventory balance , and lowered his divisions cost of goods sold thus increasing its gross profits.

 Nashwinter in one of his statements mentioned that,he always thought that the division would make enough profit one day to justify the fake numbers. Unfortunately for nashwinter , the divisions actual results continued to be dissapointing .
Finally,in 1992, he admitted to a supervisor that he had been filing false inventory reports for several years.

Nashwinter was immediately fired & Price Waterhouse* was retained to determine the errors and its impacts on the companys financial statements.

 The study revealed that nashwinters scheme had overstated Doughties net income by 15% in 1980 and by 39% in 1981. In 1980 & 1981, CPA* firm Goodman & co. audited Doughties .

Thomas wilson (audit manager) & Frank pollard (audit supervisor) from Goodman & co. audited Doughties in 1980 & 1981, hence were critized for their failure of roles by SEC (securities & exchange commission).

REPORT BY SEC SEC stated that, Doughties inventory should have been considered as a high risk account & thus a higher-thannormal audit by wilson & pollard was essential. The inventories was approximately 40% of the companys total assets. Wilson & pollard were aware of the various weaknesses in Doughties internal controls for inventory. They should have considered these complications and should have closely examined the reports. SEC also criticized wilson, pollard & deir subordinates who failed to uncover the problems in 1980 & 1981.

 According to SEC & nashwinters statement, nashwinter had forwarded 3 fictitious inventory count sheets to wilson & pollard, which were never cross examined. Infact after breifly reviewing those count sheets , they further added the items on the inventory balance. Following the divisions physical inventory, the audit senior on the doughties engagement could not reconcile the quanties of numerous items listed on the count sheets with the quantities shown on the computers printout that summarized the details of year-end inventory balance.

The senior notified wilson about the problem & wrote a memo to nashwinter , but both failed to follow up or respond to the same.

EPILOGUE
For their failure of roles in doughties, SEC ordered wilson & pollard to complete several professional education courses. Also any audit done by them in the future should be supervised thoroughly. Goodman & company was not sanctioned by SEC, since wilson & pollard failed to comply with the firms quality control standards. In 1983, Doughties dismissed goodman & co , and retained Price waterhouse as its audit firm. To settle the charges filed against him by SEC, william nashwinter signed a consent decree in which he neither admitted nor denied the charges,but agreed not to violate federal securities laws in nature.