Review of: case 11.2 The Baptist Foundation : Funds of the Faithful.

The Baptist Foundation of Arizona (BFA) was a real estate investment nonprofit that did quite well at its beginning stages. The BFA had a psychology going with its fund and with recruiting investors. Each year,at its annual convention, the BFA distributed its "Book of Reports", a financial compilation given to the convention attendees. However, the "Book of Reports" could be given to others as a means of recruiting new investors. And it is mean they lie the investor. The effect is Arizona economy ant its real estate market were sinking fast.
Because BFA's financial statements looked phenomenal, more investors joined. But by the time the Baptist Foundation of Arizona collapsed, about 11.000 investors would lose $ 590 million. Arthur Andersen, the auditor for BFA,identified "earnings management" as a significant problem at BFA. However, Andersen did not see the earnings management as enough of a problem to halt its certification of BFA's financial statements.