This website uses cookies to ensure you have the best experience. Learn more

10 Major Accounting Scandals Essay

5070 words - 21 pages

Unraveling the Details of 10 High-Profile Accounting Scandals
written by: ciel s cantoria • edited by: Linda Richter • updated: 12/30/2010 Before digging into the dirty details of each of these major accounting scandals, we’ll take a look at some of the tools that were used to first detect them – including sophisticated accounting systems and advancements in high-tech communication.

Technology Fighting Against White Collar Fraud
Looking back at the 10 major accounting scandals that changed the business world, it was noted that most of their unraveling came about during the turn of the new millennium, which was a time when the American trade and industries were beginning to experience ...view middle of the document...

As a result, multitudes became jobless, and the trend went from bad to worse throughout the decade.

The Accountants’ Connivance in the Celebrated Accounting Frauds
In the midst of all these accounting anomalies, the accountancy profession and the role it plays came into focus. Accountants helped in misleading the public by certifying that the financial reports of fraudulent companies were true and correct .

See the complete Bright Hub Guide to GAAP Rules and Procedure Essentials »

Investors placed their faith in the accompanying audit reports, which served as certifications that the reported income and expenses as well as the assets, liabilities, and stockholders’ equity in the publicly traded companies had been verified and assessed. Basically, the certification carried a statement that the results of the business operation (net income) were all accounted for, by using generally accepted accounting standards and procedures, in accordance with the generally accepted accounting principles. As we list the ten major accounting scandals, one glaring factor surfaces --- six out of the ten companies were handled by Arthur Andersen, LLP, which was then considered as one of the top five US accounting firms. As the external auditor of client-companies, the firm’s auditors did not discover the accounting anomalies. In fact, it turned out that the firm was even responsible for the cover-ups as part of its extra-services as consultant. In view of this, and before delving into the scandals themselves, this article will first examine what drove the accounting firm of Arthur Andersen to disregard its ethical and moral responsibilities.

The Underlying Factors That Gave Rise to Andersen Accounting's Connivance
The Profit Conflict between Andersen Consulting and Andersen Accounting Arthur Andersen, the person, had nothing to do with all the accounting anomalies that were attached to his name. He was the Northwestern University professor/accountant who founded Andersen Accounting (AA) firm, but he died in 1947. Years after his death, his accounting firm was reorganized into two divisions: Andersen Accounting and Andersen Consulting. Andersen Accounting was referred to as the main culprit involved in most of the major accounting scandals. The timelines in AA’s history revealed that as early as 1986, it was already suffering from a chain of million dollar lawsuits filed by companies and securities investors for the firm's failure to uncover internal frauds. All these led to the AA firm’s loss of reputation and loss of clients and to settlements that ranged from $30 million to $1.1 billion prior to the 2000 to 2003 accounting scandals. Due to the accounting firm's inability to generate company profit and heavy losses from the lawsuit settlements, the Andersen Consulting firm broke away in year 2000 and became a separate entity that now goes by its new name as Accenture. On the other hand, the Andersen Accounting division was left to face the numerous...

Other Papers Like 10 Major Accounting Scandals

Aig Accounting Scandal Essay

1565 words - 7 pages AIG / Gen Re 2004 ACCOUNTING SCANDAL Table of Contents I. Introduction 3 II. The Companies and Participants 4 III. The Setting 5 IV. Aftermath 9 V. Conclusion 10 I. Introduction AIG’s accounting scandal is one of the biggest accounting scandals in the first decade of 21st century. In 2004, SEC discovered that AIG rewrote its financial reports for years from 2000 to 2004, with support from Gen Re, one of the biggest reinsurers

Enron Scandal Essay

376 words - 2 pages since the ‘garbage in, garbage out’ principle also prevails in financial markets, public trust in the functioning of financial markets has declined as a result of major financial reporting scandals involving Enron, Tyco, WorldCom, Parmalat and others. Also, massive overvaluations of equity that occurred in the second half of the 1990s and in the early 2000s have been singled out as being caused by misinformation and manipulation of financial

Sarbanes-Oxley Act Questions

2955 words - 12 pages could be made in order to pose arguments from both sides of the act. Introduction In the early 2000’s, one of the darkest times ever experienced in the history of accounting occurred due to numerous scandals. The results of these scandals from companies lead to terrifying actions, which included the downfall of one of the largest accounting corporations, Arthur Anderson, for their help with Enron. Companies such as Enron, Tyco, and WorldCom

Positive Accounting Theory

9637 words - 39 pages paradigms published in major accounting journals and the dominance of PAT in PhD programs in US and other universities testify to the dominant position of PAT. Thus, judged by the number of research articles, the number and dominance of the journals it spawned, and the dominance of PAT in doctoral programs, PAT has been immensely influential. Before the emergence of PAT, normative accounting research had been the dominant research tradition in

Ae Report

2324 words - 10 pages other audit partners of the independent registered public accounting firm as required by law. Requires, at least every 10 years, a detailed review of the Company’s independent registered public accounting firm, including a comparison of resources available in other firms. Reviews and concurs in the appointment, replacement, performance and compensation of the Company’s General Auditor, who shall report directly to the Committee for functional

Cookies Jar

948 words - 4 pages the customer takes possession of the software or download the electronic copy. Referring to aunt Amelia lack of accounting knowledge we can discuss The Sarbanes-Oxley Act of 2002 (SOX), legislation that was created after big accounting scandals to improve company financial clarity. Section 302 of The Sarbanes-Oxley Act states that each periodic report containing financial statements filed by the company with the Securities Exchange

Title

741 words - 3 pages boards of directors The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets. Children's Internet Protection Act Schools and libraries subject to CIPA

Acts And The Financial Crisis

1538 words - 7 pages accounting firms. SOX addresses several accounting issues, including the financial auditing process and disclosure of financial information. The Act was established in response to major scandals in a number of American corporations and accounting firms a few years back. SOX goes a long way toward providing financial practices and reporting guidelines for companies. Taking a second look at SOX Although the US Sarbanes-Oxley Act of 2002 and similar

Accounting

7464 words - 30 pages far and wide; they are commonplace throughout the business and accounting frontiers. Accounting for leases, however, is not so clear cut. Since there are various ways to account for leases, many companies pick and choose which they feel best suits their situation, even when this sweeps dirt under the rug along 3 the way. The financial procedures for dealing with leases should entail benefits as well as limitations to ensure each company is

Accounting

9328 words - 38 pages variation in permitted accounting methods. Disclosure of the accounting method was emphasized instead of forcing compliance with a particular model. Major international players such as the United States, Japan, and various European nations were not forced to change Issues in Accounting Education, November 2007 China Eastern Airlines: PRC Accounting Standards, IFRS, or U.S. GAAP? 687 their domestic standards to be in compliance with an

Bus 508 Assignment 3 Forensic Accounting In Practice

1615 words - 7 pages . Several organizations worldwide provide continuing education and certification for forensic accountants. There has been a growing need for this specialized field with recent company scandals that have occurred. Forensic accountants utilize an understanding of business information and financial reporting systems, accounting and auditing standards and procedures, evidence gathering and investigative techniques, and litigation processes and

Related Essays

Rules Vs Principal Bassed Accounting Standards

1970 words - 8 pages decisions. One day there may be a worldwide accounting standard, but for now, the debate over rules-based accounting standards versus principle-based accounting standards continues to be a major debatable topic in the accounting world. References accounting-degree.org. (n.d.). The 10 Worst Corporate Accounting Scandals of All Time. Retrieved December 7, 2014, from accounting-degree: http://www.accounting-degree.org/scandals/ FACTS ABOUT FASB

Fdgfgfdg Essay

7130 words - 29 pages high-quality financial reporting. LO1–6 Explain the purpose of the conceptual framework. LO1–7 Identify the objective and qualitative characteristics of financial reporting information, and the elements of financial statements. LO1–8 Describe the four basic assumptions underlying GAAP. LO1–9 Describe the recognition, measurement and disclosure concepts that guide accounting practice. LO1–10 Contrast a revenue/expense approach and an

Forensic Accountant: Fraud Buster Essay

1726 words - 7 pages of the forensic accountant; and lastly, 4) The role of the forensic accountant in a couple of major accounting fraud scandals. The world of Accounting has seen several major scandals since the early 1990s. These include major accounting failures such as Enron, WorldCom, Adelphia, Tyco, Phar-Mor, Cendant, Computer Associates, AOL, Freddie Mac, ImClone, Qwest Communications, Royal Ahold, Health South Corporation, AIG, Lehman Brothers, and most

Csr And Psychopathy Essay

1792 words - 8 pages  act of 2010, it’s clear that with 23 major accounting scandals in just 2002 alone, the ethical flaws are systemic. And given that players like Henry Paulson, the former CEO of Goldman Sachs is given the US Treasury Secretary’s position but forced to liquidate, conveniently exploiting a tax­free public service loophole, $700 million of his holdings in Goldman Sachs for “compliance”, even the feeble attempts at governance have clear conflicts of