Accounting Scandals: The ENRON Scandal in 2001
analytical Essay
1233 words
Accounting Scandals: Accounting fraud refers to fraud that is committed by a company by maintaining false information about the sales and income in the company books, when overstating the company's assets or profits, when a company is actually undergoing a loss. These fraudulent records are then used to seek investment in the company's bond or security issues. By showing these false entries, the company attempts to apply fraudulent loan applications as a final attempt to save the company by obtaining more money from bankruptcy. Accounting frauds is actually done to hide the company’s actual financial issues. A clear example of accounting fraud is the act of purposely overpricing a company's assets in order to increment its share price. Another example is due to financial problems, saving company from collapsing. One of the biggest accounting frauds in history occurred during the Enron scandal in 2001. Accounting ethics has been difficult to control as accountants and auditors must keep in mind the interest of the public while that they remain employed by the company they are auditing. The accountants should take into account how to best apply accounting standards when company faces issues related financial loss. The role of accountant is crucial to society. They serve as financial reporters to owe their primary constraint to public interest. The information provided is critical in aiding managers, investors and others in making crucial economic decisions. An accountant is responsible for any fraudulent financial reporting. Some examples of fraudulent reporting are: • Manipulation, falsification (forgery), or alteration of accounting records or documents from which the financial statements are prepared. • Misrepresentation i... ... middle of paper ... ... inventory turnover was found to be very low. The low inventory turnover ratio was an indicator of inadequacy, since inventory usually has a rate of return of zero (Inventory Turnover Ratio Interpretation, 2009). It also implied either poor sales or excess inventory. A low turnover rate indicated poor liquidity, convincible overstocking, and obsolescence, but it would have also reflected a planned inventory build-up in the case of material shortages or in anticipation of rapidly rising prices. (Inventory Turnover Ratio Interpretation, 2009) And a rapid and unexplained rise in the number of sales per day in receivables in addition to growing inventories to cover the shortage was noted. The interviewee (Public Accountant) could smell something suspicious which led him for more detailed procedures and proactive investigation at the end of which a fraud was detected.
In this essay, the author
- Explains accounting fraud, which is committed by a company by maintaining false information about the sales and income in the company books.
- Explains accounting fraud is the act of deliberately overpricing a company's assets in order to increment its share price. another example is due to financial problems, saving company from collapsing
- Explains that accounting ethics is difficult to control as accountants and auditors must keep in mind the interest of the public while they remain employed by the company they are auditing.
- Explains accounting fraud, which is committed by a company by maintaining false information about the sales and income in the company books.
- Explains accounting fraud is the act of deliberately overpricing a company's assets in order to increment its share price. another example is due to financial problems, saving company from collapsing
- Explains that accounting ethics is difficult to control as accountants and auditors must keep in mind the interest of the public while they remain employed by the company they are auditing.
- Explains manipulation, falsification, or alteration of accounting records or documents from which the financial statements are prepared.
- Explains that assets can be misused in various ways like embezzling receipts, stealing physical assets or intellectual property, causing an entity to pay for un-received goods or services, and using entity’s assets for personal use.
- Describes the qualifications of mr. chirag patel, who is currently working and staying in north york, ontario.
- Explains that the company's printing facility is based in toronto, on and prints business cards, letterhead, postcards, color copies, and flyers.
- Opines that all accounting scandals are not caused by top executives. managers and employees are pressured or willingly alter financial statements for the personal benefit of the individual over the company.
- Explains that the interviewee also discussed an accounting scandal which was already exposed publically. nortel was handing off the excess money earned by paying out large amounts of bonuses to the employees.
- Analyzes how the top management overvalued obsolete inventory by adding additional reserve to bring down the taxable income below small business deduction level because they were running short of finance and were not able to pay taxes.
- Analyzes how nortel's scandal contravened ethical decision-making criteria by taking advantage of other employees working in the company and making it difficult for their family and friends.
- Explains how nortel's top executives manipulated secret cash accounting reserves to push the company back to profitability. they recognized revenues earlier than they should have done to meet wall street expectations.
- Analyzes how the company's financial statements were reviewed, including gross profit ratio, inventory turnover, and cost of goods sold. a low turnover rate indicated poor liquidity, convincible overstocking and obsolescence.
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- Corporate Accounting Fraudexplanatory essayIn today’s day and age, there is a lot of news that is related to corporate accounting fraud as companies intentionally manipulate their financial statements to show a better picture of their financial health. The objective of financial reporting is to provide financial information about a company to its various stakeholders such as investors and creditors so that these stakeholders can make decisions accordingly. Companies can show a better image of their financial well being by providing misleading information. This can be done by omitting material information from the books or deceitful appropriation of assets such as inventory theft, payroll fraud, check forgery or embezzlement. Fraudulent financial reporting will have an effect on the
In this essay, the author
- Explains that corporate accounting fraud is a way of providing financial information to investors and creditors so they can make decisions accordingly. fraudulent financial reporting will have an effect on stakeholders.
- Explains accounting fraud, such as check forgery, inventory theft, cash or check theft and payroll fraud. embezzlement is a common form of misappropriation where companies manipulate their accounts or create false invoices.
- Describes tyco's misappropriation of assets fraud in the early 2000s. two executives used the money from investors and used it to pay unapproved bonuses and compensation to themselves.
- Explains that corporate accounting fraud is a way of providing financial information to investors and creditors so they can make decisions accordingly. fraudulent financial reporting will have an effect on stakeholders.
- Explains accounting fraud, such as check forgery, inventory theft, cash or check theft and payroll fraud. embezzlement is a common form of misappropriation where companies manipulate their accounts or create false invoices.
- Describes tyco's misappropriation of assets fraud in the early 2000s. two executives used the money from investors and used it to pay unapproved bonuses and compensation to themselves.
- Explains that accounting fraud involves financial statements misrepresentation and manipulation to make the company attractive to investors and creditors. companies commit financial fraud to secure investors or to meet the expectations of shareholders.
- Explains how the infamous enron scandal led to the company's bankruptcy in 2001. the company concealed huge debts off its balance sheet, which resulted in overstating earnings.
- Explains that olympus' $1.7 billion fraud shows an unreal picture of the company's financial strength and makes investors make investments, which they otherwise would not have made if they had known the true picture.
- Explains how fraudulent financial reporting can have an effect on all stakeholders involved. the public loses confidence in the management and the company.
1084 wordsRead More - The Enron Corporation Scandalanalytical essayThe American Dream typically involves working hard to build up an organization, maintaining it well, and reaping the benefits. This vision most certainly drove the formation of the energy powerhouse known as the Enron Corporation. The company began as two average sized organizations and within 15 years emerged as America’s seventh largest company. The organization employed close to 21,000 staff members with locations in over 40 nations around the world. Unfortunately, this success was decimated by numerous scandals involved with accounting practices. From lies of profits to questionable dealings, such as concealing debts, the parties involved with running the company had made some fatal errors. The end result left Enron without creditors and investors, leading to the firm to file for Chapter 11 bankruptcy (British Broadcasting Corporation, Enron Scandal at a Glance). The story of this once remarkable company is one that can be traced from the decisions made from its inception leading all the way to the much publicized trials that ensued.
In this essay, the author
- Explains that the american dream involves building up an organization, maintaining it well, and reaping the benefits, which led to the formation of the energy powerhouse known as the enron corporation.
- Explains that enron corporation was an american company that specialized in energy commodities and services well known for its impressive rise and scandalous decline.
- Describes how jeffery skilling, a senior partner for mckinsey & company, founded enron in the nineties to enter the natural gas commodities trade.
- Explains that the american dream involves building up an organization, maintaining it well, and reaping the benefits, which led to the formation of the energy powerhouse known as the enron corporation.
- Explains that enron corporation was an american company that specialized in energy commodities and services well known for its impressive rise and scandalous decline.
- Describes how jeffery skilling, a senior partner for mckinsey & company, founded enron in the nineties to enter the natural gas commodities trade.
- Explains how enron's success came largely from trade. skilling aided the company in creating a huge business in trading natural gas and electricity.
- Analyzes how the fall of 2001 led to additional problems that truly began to add up unfavorably for enron.
- Narrates how lay's resignation, the justice department’s criminal investigation, and former employee michael kopper pleaded guilty to money laundering and conspiracy, as well as identifying partnerships designed to portray enron as financially healthy.
- Analyzes how lay blamed andrew fastow for enron's biggest mistake, blaming the downfall on a conspiracy of short sellers and poor media reports. before the sentencing, kenneth lay dies and jeffrey skilling is sentenced to 24 years in prison.
- Explains that the sarbanes-oxley act of 2002 set standards for all us public company boards, management and public accounting firms. enron executives made crucial errors that contributed to its downfall.
- Analyzes how enron continued to strive for recognition and growth in the late nineties, but the economic pieces began to show hints of fault.
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In this essay, the author
- Explains that corporate fraud is defined as violations of the internal revenue code and related statutes committed by large publicly traded (or private) corporations and/or their senior executives.
- Describes how enron became one of the leading natural gas distributors in north america after acquiring a large pipeline network. the company reported revenues of $101 billion at its peak in 2000.
- Explains that enron declared bankruptcy in late 2001 amid a flurry of accusations of misleading accounting, unreliable financial disclosure, and probable criminal behavior.
- Explains that corporate fraud is defined as violations of the internal revenue code and related statutes committed by large publicly traded (or private) corporations and/or their senior executives.
- Describes how enron became one of the leading natural gas distributors in north america after acquiring a large pipeline network. the company reported revenues of $101 billion at its peak in 2000.
- Explains that enron declared bankruptcy in late 2001 amid a flurry of accusations of misleading accounting, unreliable financial disclosure, and probable criminal behavior.
- Explains that the collapse of enron and other large corporations influenced congress to take action, and this led to president bush signing the sarbanes-oxley act into law on july 30, 2002.
- Explains that the sarbanes-oxley act created the public company accounting oversight board, a private sector, nonprofit organization with five members, including the chairman, who are appointed by the security and exchange commission.
- Describes the eleven sections of the sarbanes-oxley act, which range from the execution of corporate tax returns to the penalties charged when any company violates the law.
- Explains that there haven't been many favorable opinions supporting the sarbanes-oxley act. investor confidence increased as more corporations produced reliable financial reports, which resulted in more activity on the stock markets.
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In this essay, the author
- Explains that enron was one of the world's largest energy trading and distribution company with an income of nearly hundred billion dollars during 2000.
- Explains how enron incorporated "mark-to-market accounting" for the energy trading business in the mid-1990s and used it on a huge scale for its trading transactions.
- Explains that satyam computer services limited (scsl) was the fourth largest provider of information technology services in india. its founder/chairman mr. ramalingam raju indulged in window dressing of the company’s financial accounts.
- Explains that enron was one of the world's largest energy trading and distribution company with an income of nearly hundred billion dollars during 2000.
- Explains how enron incorporated "mark-to-market accounting" for the energy trading business in the mid-1990s and used it on a huge scale for its trading transactions.
- Explains that satyam computer services limited (scsl) was the fourth largest provider of information technology services in india. its founder/chairman mr. ramalingam raju indulged in window dressing of the company’s financial accounts.
- Explains that mr. raju and the company's global head of internal audit used various fraudulent techniques to carry out organized fraud.
- Explains that a senior team of auditors from the securities and exchange board of india (sebi) began an investigation into the fraud. satyam's shares crashed to eleven point five rupees on january 10, 2009, the lowest level since march 1998.
- Explains that the worldcom scandal, lehman brothers, tyco, hbsc and hih insurance company scams involved manipulation of financial accounts for personal benefit. all companies involved in accounting frauds went bankrupt.
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In this essay, the author
- Explains that lay and skilling were found guilty of fraud and conspiracy on may 25th, 2006. the fallout from enron has changed the way business is conducted to this day.
- Explains how accounting played a big role in the collapse of enron and the financial backlash that followed it.
- Explains how the enron debacle caused the stock price to collapse, leaving employees with worthless stock options and pensions.
- Explains that lay and skilling were found guilty of fraud and conspiracy on may 25th, 2006. the fallout from enron has changed the way business is conducted to this day.
- Explains how accounting played a big role in the collapse of enron and the financial backlash that followed it.
- Explains how the enron debacle caused the stock price to collapse, leaving employees with worthless stock options and pensions.
- Analyzes how enron avoided standardized audits because of its special treatment from politicians and wall street, which allowed them to prepare fraudulent statements.
- Opines that enron collapsed because of corporate officers encouraging greed and fraud without regard to ethical standards.
- Explains that enron chiefs guilty of fraud and conspiracy.
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In this essay, the author
- Explains that while sox may have gone too far, congress was within their right to address the financial reporting issue. between 2001 and 2002, american investors lost over $300 billion as a result of various financial scandals.
- Analyzes how the burdensome costs of sox harm the bottom line of all companies, but the effects are disproportionately felt by the "small cap" companies.
- Explains that the sarbanes-oxley act of 2002 was passed in response to the widely publicized instances of fraud and corruption in large us companies.
- Explains that while sox may have gone too far, congress was within their right to address the financial reporting issue. between 2001 and 2002, american investors lost over $300 billion as a result of various financial scandals.
- Analyzes how the burdensome costs of sox harm the bottom line of all companies, but the effects are disproportionately felt by the "small cap" companies.
- Explains that the sarbanes-oxley act of 2002 was passed in response to the widely publicized instances of fraud and corruption in large us companies.
- Analyzes how sox increased auditor independence and increased demands for internal controls to combat the rash of financial reporting scandals.
- Argues that financial reporting and oversight regulations adhere to the law of diminishing returns, which means each additional measure yields fewer benefits.
- Analyzes how the sarbanes-oxley act and neoliberal governance of corporate america impacted the 99%.
1741 wordsRead More - Corporate/Commercial Fraudanalytical essayThe Royal Canadian Mounted Police [RCMP] classifies corporate fraud into two different categories: fraud by a company and fraud against a company (para. 5). The RCMP explains fraud against a company can happen through “misappropriation of corporate assets by a company senior officer or by staff” (para. 5). Employees defraud companies with methods such as “fictitious revenues, concealed liabilities and expenses, and asset or revenue understatements or overstatements” where as fraud by a company happens by “providing incorrect or misleading information to shareholders or regulators, including financial reporting fraud – where incorrect or misleading information is provided for individual financial gain” (RCMP, para. 5). The Federal Bureau of Investigation [FBI] breaks down corporate fraud into three categories based on the action of the fraudster or fraudulent company. These categories are falsifying financial information or accounting schemes, self-dealing by corporate insiders and obstruction of justice (FBI, para. 16).
In this essay, the author
- Explains that the royal canadian mounted police classifies corporate fraud into two different categories.
- Explains that the fbi's self-dealing category would fall under the rcmp’s category of fraud against a company.
- Explains that 2700 of the 6000 fraud-related complaints received by the securities and exchange commission were related to accounting schemes.
- Explains that the royal canadian mounted police classifies corporate fraud into two different categories.
- Explains that the fbi's self-dealing category would fall under the rcmp’s category of fraud against a company.
- Explains that 2700 of the 6000 fraud-related complaints received by the securities and exchange commission were related to accounting schemes.
- Analyzes how the fall of the economy has led to layoffs and bankruptcy filings. in tough times, executives and management can feel pressure to report positive results to their shareholders.
- Explains that lehman brothers filed for bankruptcy in 2008 after complaints about fraudulent transactions called "repo 105". these transactions involve short-term borrowing called repurchase agreements, which allow banks to take bigger risks in trading but also put them in a risky financial situation.
- Analyzes how maria schapiro, sec chairman, goes into more depth concerning these transactions in their testimony concerning the lehman brothers examiner’s report.
- Explains that satyam falsified their financial statements to appeal to investors and report results to make their shareholders happy, but it was done on a larger scale.
- Analyzes how accounting schemes were used to falsify financial statements to create a better outlook for investors and shareholders.
- Cites the federal bureau of investigation's 2009 financial crimes report. pricewaterhousecoopersdefends its audit procedures.
- Explains that the royal canadian mounted police (rcmp) has published a report on the lehman brothers examiner's report. the securities and exchange commission (sec).
- Explains that satyam fiasco: corporate governance failure and lessons therefrom.
1174 wordsRead More - Waste Management Scandal Case Studyexplanatory essaySome of the most well-known accounting frauds in the U.S., in the past two decades are the Waste Management Scandal (1998), Enron (2001), WorldCom (2002) that brought the Sarbanes-Oxley Act, Tyco (2002), HealthSouth (2003), Freddie Mac (2003), Fannie Mae (2004), AIG (2005), and Lehman Brothers (2008), to name a few (Accounting-degree.org, n.d.). (Dear Our topic is corporate collapses, not accounting frauds, i think we should talk about some of the most well known corporate collapses in US)
In this essay, the author
- Explains that bernard l. madoff investment securities (blmis) collapsed after he admitted to having been involved in a ponzi scheme for decades.
- Explains that bernard l. madoff investment securities llc was founded in 1960 and became involved in market making, proprietary trading, and investment advisory services.
- Explains that madoff collected investment funds from customers, which mainly consisted of celebrities, billionaires, charities, banks, hedge funds, and other prominent investors. the credit crisis in 2007 prompted several investors to pull out money to support other investments or businesses facing capital crunches
- Explains that bernard l. madoff investment securities (blmis) collapsed after he admitted to having been involved in a ponzi scheme for decades.
- Explains that bernard l. madoff investment securities llc was founded in 1960 and became involved in market making, proprietary trading, and investment advisory services.
- Explains that madoff collected investment funds from customers, which mainly consisted of celebrities, billionaires, charities, banks, hedge funds, and other prominent investors. the credit crisis in 2007 prompted several investors to pull out money to support other investments or businesses facing capital crunches
- Explains that blmis was a massive out-and-out fraud that included creation of completely falsified financial statements and accounting books, not just manipulating accounting numbers to inflate assets.
- Explains that the waste management scandal, enron, worldcom, tyco, freddie mac, fannie mae, aig, and lehman brothers are some of the most well-known accounting frauds in the us.
- Explains that the collapse of blmis was due to two reasons: it was a ponzi scheme, which were technically insolvent from the first day, and the start of the 2007 credit crunch.
1020 wordsRead More - Business Analysis: WorldCom Inc.analytical essayKaplan, R. S., & Kiron, D. (2007). Accounting Fraud at WorldCom. Boston: Harvard Business School Publishing.
In this essay, the author
- Opines that a majority of job seekers would jump at the opportunity to perform in that role and within that culture of aggressive performance and rewards.
- Analyzes how the organizational culture promoted flexibility in shady decision-making and a doing whatever-it-takes attitude towards hitting their wall street financial forecast.
- Analyzes how worldcom's organizational culture encouraged a systemic attitude conveyed from top down that employees should not question their superiors.
- Opines that a majority of job seekers would jump at the opportunity to perform in that role and within that culture of aggressive performance and rewards.
- Analyzes how the organizational culture promoted flexibility in shady decision-making and a doing whatever-it-takes attitude towards hitting their wall street financial forecast.
- Analyzes how worldcom's organizational culture encouraged a systemic attitude conveyed from top down that employees should not question their superiors.
- Explains that worldcom's business operations and revenue accounting groups tracked the difference between projected and target revenue and kept a running tally of accounting "opportunities" to bridge that gap.
- Argues that worldcom's failure was driven by their organizational culture and supported by the auditing firm arthur andersen’s lack of responsible follow up.
- Recommends that worldcom establish formal guidance around ethics and the role it plays in the construct of reporting.
- Recommends eliminating incentives tied to the auditing firm responsible for providing the organization's financial reporting, and rotating the reporting agency every few years to ensure that reporting anomalies are found and reviewed.
- Recommends re-establish a clear path by which all employees could report issues of wrongdoing.
- Argues that cultural climate and not having the proper safeguards, especially in fraud reporting, can have detrimental effects on an organization.
- Explains that reports blast corporate culture that caused worldcom collapse. retrieved march 23, 2011.
- Cites breeden, r. c., & kiron, d. (2007). accounting fraud at worldcom.
1066 wordsRead More - Cendant Case Studycomparative essayFraud is defined as someone try to act with intention to cheat other people in order to acquire an unfair or illegal advantage. The fraud happens due to management override the internal control of the organisation and fraud will affect the financial reporting. The main categories of fraud that can affect financial reporting are fraudulent financial reporting and misappropriation of assets.
In this essay, the author
- Explains management override is management's over monitor internal control of the company, which hides or alters the document and data in order to achieve the business target. cuc raised earnings by recording fictitious revenues and reducing expenses to meet wall street analysts' expectations.
- Explains that fraud occurs due to management overriding the internal control of the organisation and fraud affects financial reporting.
- Explains the three types of factors auditors should consider when assessing the likelihood of material misstatements due to fraud: an incentive or pressure to perpetrate fraud, an opportunity to carry out the fraud and an attitude rationalisation to justify the fraudulent action.
- Explains management override is management's over monitor internal control of the company, which hides or alters the document and data in order to achieve the business target. cuc raised earnings by recording fictitious revenues and reducing expenses to meet wall street analysts' expectations.
- Explains that fraud occurs due to management overriding the internal control of the organisation and fraud affects financial reporting.
- Explains the three types of factors auditors should consider when assessing the likelihood of material misstatements due to fraud: an incentive or pressure to perpetrate fraud, an opportunity to carry out the fraud and an attitude rationalisation to justify the fraudulent action.
- Recommends that auditors carry out the following steps when facing management override of internal control to solve the problem.
778 wordsRead More - Accounting Fraud, the Investor and the Sarbanes Oxley Actexplanatory essayMadura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
In this essay, the author
- Explains that the us government amended the sarbanes oxley act of 2002 to mitigate these problems.
- Explains that when a large company commits accounting fraud and is caught, the implications from their actions are very far reaching.
- Opines that accounting fraud is not directly affected by the bankruptcies. millions of americans who were heavily invested through their 401(k) retirement plans had to postpone retirement and rethink their investment strategy.
- Explains that the us government amended the sarbanes oxley act of 2002 to mitigate these problems.
- Explains that when a large company commits accounting fraud and is caught, the implications from their actions are very far reaching.
- Opines that accounting fraud is not directly affected by the bankruptcies. millions of americans who were heavily invested through their 401(k) retirement plans had to postpone retirement and rethink their investment strategy.
- Explains how executives can "cook the books" to make a company look more profitable and stable than it actually is.
- Explains that the sarbanes-oxley act of 2002 was enacted to protect investors by fighting corporate crime and improving corporate governance.
- Explains that the board of directors in a company must have at least five financially literate members appointed for five-year terms. the audit lead or coordinator partner and reviewing partner must rotate every five years.
- Explains that the act protects whistleblowers who come forth with incriminating information about activities within their company, especially with the increasing prosecution following sarbanes-oxley.
- Explains that sarbanes-oxley provides certain blackout periods for stock trading in which officers and directors cannot purchase or sell stock. profits resulting from sales in violation of this are recoverable by the issuer.
- Explains the sec's control over sarbanes-oxley, including the ability to restrict people from serving on the board of directors if they have a securities fraud issue in their background.
- Opines that the most challenging area for companies is the saving of all communications and the creation of transparent and auditable systems for recording transactions.
- Explains that sarbanes-oxley is intended to give the investor back some measure of confidence with the internal accounting practices of the organization.
- Explains that since the act has been put into place, nothing related to financial reporting is taken for granted. most companies have implemented better corporate governance procedures. audit committees and boards of directors are now more engaged in their responsibilities.
- Opines that companies are more often identifying and modifying control shortages before misstatements happen on their financial statements.
- Explains that companies will be forced to put into place systems and processes to track and save correspondence. they will often need to start new or serious changes on their it accounting systems to meet the standards for sarbanes oxley.
- Opines that training employees on new systems, processes, and procedures is expensive and should be larger up front. they can use their trained employees to train new employees in future years.
- Explains that applying sarbanes-oxley compliance in an organization will take a significant amount of time for involved employees. documenting processes will only need to be modified down the road.
- Opines that organizations must be prepared for the controls that will be given up to their systems when following sarbanes oxley.
- Opines that companies need to show due diligence to protect themselves from accounting issues. the higher the compliance checks and balances are and the more secure processes are in place, the better chance the company has to defend itself.
- Opines that sarbanes-oxley is only effective if the general idea of the organization leans toward ethical business practices.
- Opines that whistle blower protection should be strong and understood in sarbanes-oxley to help promote ethical standards. this will allow employees to discuss issues without fear of retribution.
- Opines that sarbanes-oxley is not an option for publicly traded companies. the company must decide whether to implement the minimum to get by with compliance or do you put in place a strong system to fully protect and improve current accounting practices.
- Opines that sarbanes oxley compliance is not an overnight transition. companies need to take a look at the needs of their organization, their current structure, and put in place what will work best for their investors, employees and company.
- Describes the contents of the book, "ethics in auditing".
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In this essay, the author
- Explains that fraud is basically deception by showing people what they want to see. in business it's the same concept, but in a larger scale by manipulating figures that will be shown to shareholders and investors.
- Analyzes how kenneth lay, andrew fastow, and jeff skilling are the captains behind a successful corporation.
- Analyzes how companies like "enron" and "worldcom" were focused on making the numbers at any cost between 1985 and 2000.
- Explains that fraud is basically deception by showing people what they want to see. in business it's the same concept, but in a larger scale by manipulating figures that will be shown to shareholders and investors.
- Analyzes how kenneth lay, andrew fastow, and jeff skilling are the captains behind a successful corporation.
- Analyzes how companies like "enron" and "worldcom" were focused on making the numbers at any cost between 1985 and 2000.
- Opines that ebbers' desire to protect his financial well-being led him to commit fraud and make false promises by showing a growing net worth for his "worldcom" stock.
- Concludes that ebbers deserved a lighter sentence, but it encouraged congress to enact the sarbanes oxley act, which requires companies to report their books to avoid any other "enron or worldcom" scandal.
946 wordsRead More - Comparative Analysis Of Income Smoothingexplanatory essayStudies revealed that firms’ managers willfully manipulate reported to fit their own intentions by selecting accounting policies, changing accounting estimates and manipulating accruals (Yoon and Miller, 2002). And of course, the integrity of the firms’ managers due to meet their personal interest, incentives scheme or both. For example, to get a promotion from current position in firm, avoiding company tax payable and many other reasons which could benefits the firms and personal interests.
In this essay, the author
- Explains that firms engage in earnings management for various reasons, and any decisions or actions taken by them can affect their stakeholders. primary and secondary stakeholders engage directly with the firms, customers, creditors, employees, shareholders, investors, media and public.
- Explains that income smoothing is a technique which managers of any firm will adopt in their accounting process in manipulating their earnings.
- Explains that accounting income smoothing was viewed as "cheating", "misleading" and "immoral" on the part of the firm's management.
- Explains that firms engage in earnings management for various reasons, and any decisions or actions taken by them can affect their stakeholders. primary and secondary stakeholders engage directly with the firms, customers, creditors, employees, shareholders, investors, media and public.
- Explains that income smoothing is a technique which managers of any firm will adopt in their accounting process in manipulating their earnings.
- Explains that accounting income smoothing was viewed as "cheating", "misleading" and "immoral" on the part of the firm's management.
- Explains that managers manipulate the firm's earnings in order to secure their position in the organization. they violate their power in managing firm to fulfill their personal interests due to greed.
1569 wordsRead More - The Impact Of Accounting Fraudexplanatory essayIt includes an employee or the organization and is deceptive to shareholders and investors. An organization can misrepresent its financial statements by exaggerating its income or resources, not recording costs and under-recording liabilities. A number of categories and sub-categories can be divided up for fraud. Some examples are consumer fraud, management fraud, employee embezzlement, Ponzi schemes and numerous
In this essay, the author
- Opines that accounting fraud is a consistent thing that will reliably be around, and that an extensive apportion of organizations fight with fraud, either from within the organization, or from outside.
- Explains that bolt-lee & kern (2015) affirm that there is no single template for fraud or single face of a fraudster.
- Explains that if one's objective is to execute financial statement fraud, there are huge amounts of approaches to do, including income administration/control.
- Opines that accounting fraud is a consistent thing that will reliably be around, and that an extensive apportion of organizations fight with fraud, either from within the organization, or from outside.
- Explains that bolt-lee & kern (2015) affirm that there is no single template for fraud or single face of a fraudster.
- Explains that if one's objective is to execute financial statement fraud, there are huge amounts of approaches to do, including income administration/control.
- Explains that accounting fraud is the deliberate control of financial statements to make a veneer of an organization's financial wellbeing.
- Explains shapiro's definition of accounting fraud as purposeful deception of financial statements, culpable criminally or commonly, with a specific end goal to get wrongfully favorable position, hold an advantage, or keep away from an impairment.
- Explains bolt-lee's view that generally accepted auditing standards require extensive client inquiry, while brown, hays and stuebs, jr. acknowledge that the open door for fraud happens when controls are ineffectual or nonexistent.
- Explains that accounting mistakes resemble fraud without awareness of falsity or incompleteness. the principle territory to be addressed was accounting fraud and how it could impact an organization.
- Cites bolt-lee, kern, stuebs, and boyle, d. m.
1617 wordsRead More - Analysis of the Enron/Arthur Anderson Scandalanalytical essayGiroux, G. (Winter 2008). What went wrong? Accounting fraud and lessons from the recent scandals. Social Research, 75, 4. p.1205 (34). Retrieved June 16, 2011, from Academic OneFile via Gale:
In this essay, the author
- Explains that enron and arthur anderson were both giants in their own industry. their "creative" accounting methods resulted in record-breaking earnings, while anderson failed to comply with auditing standards.
- Explains enron's unethical accounting practices date back to 1987. anderson investigated and reported these unusual transactions to the audit committee, but failed to discuss the illegality of the acts.
- Explains how enron's creative accounting practices spiraled out of control as competition grew against the energy giant.
- Explains that enron and arthur anderson were both giants in their own industry. their "creative" accounting methods resulted in record-breaking earnings, while anderson failed to comply with auditing standards.
- Explains enron's unethical accounting practices date back to 1987. anderson investigated and reported these unusual transactions to the audit committee, but failed to discuss the illegality of the acts.
- Explains how enron's creative accounting practices spiraled out of control as competition grew against the energy giant.
- Argues that anderson failed to meet and exercise the standards of auditing. anderson provided both audit and consultation services for enron, earning substantial fees for their services.
- Explains how acl (n.d.) a, analytical techniques to fraud detection. fraud detection using data analytics.
- Argues that anderson should have planned additional auditing procedures to test the effectiveness of internal controls at enron.
- Opines that it is too late for those at enron and arthur anderson to learn from their mistakes.
- Cites the american institute of certified public accountants (aicpa) and cunningham, g.m., and elder, r.j.
- Explains the sarbanes-oxley act of 2002 (sox), thomas, c.w., the rise and fall of enron.
1550 wordsRead More