Waste Management Scandal Case Study

The Waste Management scandal is well known as one of the most noteworthy cases of accounting fraud in the world history. By using of improper accounting procedures, Waste Management was able to falsely increase the depreciation time length for their properties, plants and equipment on the balance sheet, hence, boosting the company’s value. The Waste Management scandal, along with other cases of accounting fraud at that time, not only had far-reaching negative consequences, but also emphasized the major faults of the accounting profession at the turn of the new century.
Waste Management Inc. is a Texas based public company which provides waste management in North America. It offers a variety of other services, such as, collection, transferring, recycling, disposal, waste-to-energy and landfill gas-to-energy operations in the U.S. and throughout North America (New York Times n.d.).
The fraud was involved by five seniors top officers of Waste Management Inc. and lasted for five years from 1992 to 1997. Those defendants, who had complete control of Waste Management Inc. were Waste Management’s founder and chief executive officer Dean L. Buntrock, president Philip B. Rooney, vice president James E. Koenig, chief accounting officer Thomas C. Hau, senior vice president Herbert Getz and vice president of finance Bruce D. Tobecksen (U.S. Securities and Exchange Commision, 2002). Along with the cozy relationship and support from their auditing partner, Author Anderson, the fraud was renowned as biggest fraudulent practice in that time. They together had misstated pretax earnings more than $1.7 billion. The reason they began to commit their fraud was because the company’s profits didn’t meet their expectation, so they wrongly reduced and d...

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...reason of those modifications is also necessary. More importantly, auditors should also carefully analyze and evaluate the circumstances in which why these changes were made. Moreover, auditors could inquire from other knowledgeable person from outside of the company (a third party) to seek help in order to make a proper determination.
In conclusion, Waste Management’s fraudulent accounting practices ruined a great number of people financially; particularly shareholders and investors had lost more than 6 billion dollars. Scandals such as Waste Management shed light upon the flaws of the accounting profession at the time and conveyed a valuable lesson for our generation. As future auditors, we have to take significant action to ensure that such fraudulent practices would be detected before they have the chance to become as grandiose as the Waste Management scandal.