Happiness Express, a toy company, was founded in 1989 by Joseph Sutton and Isaac Sutton. The company quickly took off and managed to capture a share of the very competitive toy manufacturing market. In the first year of business they made a few thousand dollars in sales, but by the fifth year total revenues exceeded $40 million. The company's business model was designed to identify the latest children's characters that would be most marketable in the United States. They achieved this by building on market research that identified children's areas of interest in new media. Happiness Express relied primarily on this research and through this research developed its motto: “In Kids We Trust.” Once the brothers had determined which media characters would become popular among children, they purchased the licensing rights to merchandise for these characters from various studios and publishing houses. Happiness Express could then use these merchandising rights to produce character figurines, shoelaces, toothbrushes, stuffed animals and a variety of “back to school” items. After the products were manufactured, the brothers would then market them to FAO Schwartz, Kmart, Target, Toys "R" Us and Wal-Mart. Happiness Express began its operations by purchasing the licensing rights to "The Little Mermaid" and "Barney". The success of these lines allowed the company to firmly establish itself in the toy market. In July 1994, Happiness Express went public with an initial offering of $10 per share, and within a few months the company's stock price doubled. In 1995, Happiness Express was named “#1 Hot Growth Company” by Business Week, the “Barney” commodity ” ac...... center of paper ...... was prevalent in the audit review including large amounts of receivables in the last month of fiscal 1995. The accounts of West Coast Liquidators and Wow Wee International Ltd. were showing large credit sales in the final days of 1995. This was unusual for both of these accounts and Cooper & Lybrand should have taken steps to verify these sales beyond just the confirmation letter. If a confirmation cannot be acquired, the team The audit manager must review the previous transactions that the company has made with that particular customer to see whether the large sales are regular or irregular. Due to Cooper & Lybrand's failure to conduct a proper audit, the insider trading information was provided to outside individuals who could have profited from the deception. Cooper & Lybrand is responsible for the damages suffered by Happiness Express shareholders due to their ineffectiveness.