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Many of the biggest corporate accounting scandals in history happened during that time. Here's a chronological look back at some of the worst examples. Waste Management Scandal Company: Houston-based publicly traded waste management company What happened: Buntrock and other top executives; Arthur Andersen Company auditors How they did it: The company allegedly falsely increased the depreciation time length for their property, plant and equipment on the balance sheets.
How they got caught: A new CEO and management team went through the books. After the scandal, new CEO A. Maurice Meyers set up an anonymous company hotline where employees could report dishonest or improper behavior. Enron Scandal Company: Houston-based commodities, energy and service corporation What happened: How they did it: Kept huge debts off balance sheets.
Turned in by internal whistleblower Sherron Watkins; high stock prices fueled external suspicions. Lay died before serving time; Skilling got 24 years in prison. The company filed for bankruptcy.
Arthur Andersen was found guilty of fudging Enron's accounts. WorldCom Scandal Company: Telecommunications company; now MCI, Inc. Underreported line costs by capitalizing rather than expensing and inflated revenues with fake accounting entries.
How he got caught: CFO was fired, controller resigned, and the company filed for bankruptcy. Ebbers sentenced to 25 years for fraud, conspiracy and filing false documents with regulators.
Within weeks of the scandal, Congress passed the Sarbanes-Oxley Act, introducing the most sweeping set of new business regulations since the s. Tyco Scandal Company: New Jersey-based blue-chip Swiss security systems.
Siphoned money through unapproved loans and fraudulent stock sales. Money was smuggled out of company disguised as executive bonuses or benefits. SEC and Manhattan D.
Kozlowski and Swartz were sentenced to years in prison. HealthSouth Scandal Company: Largest publicly traded health care company in the U. How he did it: Allegedly told underlings to make up numbers and transactions from Scrushy was acquitted of all 36 counts of accounting fraud, but convicted of bribing the governor of Alabama, leading to a 7-year prison sentence.
Scrushy now works as a motivational speaker and maintains his innocence. Freddie Mac Company: Federally backed mortgage-financing giant.
Intentionally misstated and understated earnings on the books. Allegedly booked loans as revenue, steered clients to insurers with whom AIG had payoff agreements, and told traders to inflate AIG stock price.The term 'creative accounting' can be defined in a number of ways.
Initially we will offer this definition: 'a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business'. Creative accounting, which generally involves the preparation of financial statements with the intention of misleading readers of those statements, is prima facie a form oflying, as defined by Bok.
1 This paper starts by defining and illustrating creative accounting.
It examines and rejects the. When I was interviewed for a job last week, they asked me which areas I had expertise in and would know how to handle. Ethical Perspectives towards Creative Accounting Justices had faded from the accounting profession long time ago and this reflects the current state of morality in the society.
Ethics is defined as the discipline which deals with what is good and bad and with moral duty and obligation principles of conduct governing an individual or a group. THE ETHICS OF CREATIVE ACCOUNTING INTRODUCTION The term 'creative accounting' can be defined in a number of ways. Initially we will offer this definition: 'a process whereby accountants use their knowledge of accounting rules to.
Creative accounting is the use of accounting knowledge to better reflect the financial position, financial performance of an entity within the jurisdictions of accounting standards but deviating.