Executive Summary In this company fraud evaluative report, the author focused on Just for Feet Inc. The company started operations in 1977. However, cases of fraud led to its closure in 2004. The fraud included the provision of misleading and inaccurate financial records. Other instances included fictitious rebate receivables, invented co-op revenue, non-existent booth income, and inflated inventory. The affected stakeholders included Kelvin Pfeiffer, Antonio Molendez, and the employees. The fraud could have been averted by putting in place internal control mechanisms and engaging honest external auditors. Introduction Fraud is the planned deception carried out by a person or an entity for illegal gains (Barclift 288). Governments around the world have put in place legislation to make sure that business persons within their jurisdictions do not engage in this crime. Fraud may lead to, among others, the collapse of a company. In this report, the author will analyze the fraud that led to the collapse of Just for Feet Inc. To this end, the author will provide a brief history of the company, an analysis of the role of the auditors in the fraud, and a review of internal controls that were ignored by the perpetrators of the crime. Finally, the author will identify accounting policies that are designed to avert such a scenario in the future. Just for Feet Inc.: An Analysis of the Fraud A Brief History of Just for Feet Inc. The company was started in 1977. It focused on the distribution of athletic and sportswear. It became one of the largest companies in the country’s sportswear sector. The firm closed down in 2004 (“Complaint about Injunctive and Other Relief” 6). Its collapse was brought about by fraud. The firm operated more than 140 outlets in 25 states. In addition to sportswear, the stores owned by the company provided the shoppers with a wide range of entertainment features (Barker et al. 56). The company was managed by Harold Rotenberg. The Role Played by the Auditors in the Fraud The cases of fraud reported in the company included fictitious Rogers rebate receivables (“Complaint about Injunctive and Other Relief” 19). The auditors increased the revenue of the company through the creation of false and fraudulent receivables. Rogers was contracted as Just for Feet’s outside advertising agency. The auditors also allowed the company to mislead the public through the establishment of fictitious co-op revenue (Whittington and Pany 45). The vendors were allowed to offer ‘written’ financial assistance. As a result, the company shared the proceeds made from selling a given product with these individuals (Whittington and Pany 99). Auditors are expected to adhere to a number of rules when dealing with a business organization (Wood et al. 123). One of the standards entails the provision of accurate financial records. However, the auditors at Just for Feet failed to adhere to this provision in their dealings with Just for Feet Inc. A case in point is the company’s balance sheet as of January 30th, 1999. The document showed that the merchandise inventory held by the firm stood at $399.9 million. However, a review of the company’s records showed that this figure was inflated by almost 100%. The actual figure was $206.1 million (“Complaint about Injunctive and Other Relief” 17). Another fraud that the auditors helped the company to perpetrate entailed the provision of fictitious booth income (Barclift 280). At the beginning of December 1996,