Investigate an accounting scandal. You can find your own, or if you need some di
ID: 2452496 • Letter: I
Question
Investigate an accounting scandal. You can find your own, or if you need some direction, below are some of the most famous (or infamous) examples:
ZZZZ Best (1986), Waste Management (1998), Enron (2001), WorldCom (2002), Tyco (2002), HealthSouth (2003), AIG (2005), Lehman (2008), Madoff Investment Securities (2008).
Describe and explain the accounting scandal.
Investigate an accounting scandal. You can find your own, or if you need some direction, below are some of the most famous (or infamous) examples:
ZZZZ Best (1986), Waste Management (1998), Enron (2001), WorldCom (2002), Tyco (2002), HealthSouth (2003), AIG (2005), Lehman (2008), Madoff Investment Securities (2008).
Describe and explain the accounting scandal.
Explanation / Answer
Accounting scandals are political or business scandals which arise with the disclosure of financial misdeeds by trusted executives of corporations or governments. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, sometimes with the cooperation of officials in other corporations or affiliates.
In public companies, this type of "creative accounting" can amount to fraud, and investigations are typically launched by government oversight agencies, such as the Securities and Exchange Commission (SEC) in the United States.
Barry Jay Minkow (born March 17, 1967) is an American former businessman, pastor, and convicted felon. While still in high school, he founded ZZZZ Best (pronounced "Zee Best"), which appeared to be an immensely successful carpet-cleaning and restoration company. However, it was actually a front to attract investment for a massive Ponzi scheme. It collapsed in 1987, costing investors and lenders $100 million—one of the largest investment frauds ever perpetrated by a single person, as well as one of the largest accounting frauds in history. The scheme is often used as a case study of accounting fraud.
ZZZZ BEST (1986): After being released from jail, Minkow became a pastor and fraud investigator in San Diego, and spoke at schools about ethics. This all came to an end in 2011, when he admitted to helping deliberately drive down the stock price of homebuilder Lennar and was ordered back to prison for five years. Three years later, he admitted to defrauding his own church and was sentenced to an additional five years in prison. As a result of his crimes, he faces having to pay a total of $612 million in restitution—an amount that he will likely spend the rest of his life repaying.
Enron Corporation (2001)(former New York Stock Exchange ticker symbol ENE) was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world's major electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $111 billion during 2000.Fortune named Enron "America's Most Innovative Company" for six consecutive years.
At the end of 2001, it was revealed that its reported financial condition was sustained substantially by an institutionalized, systematic, and creatively planned accounting fraud, known since as the Enron scandal. Enron has since become a well-known example of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations in the United States and was a factor in the enactment of the Sarbanes–Oxley Act of 2002. The scandal also affected the greater business world by causing the dissolution of the Arthur Andersen accounting firm.
Arthur Andersen Witnesses
Enron filed for bankruptcy in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It ended its bankruptcy during November 2004, pursuant to a court-approved plan of reorganization, after one of the most complex bankruptcy cases in U.S. history. A new board of directors changed the name of Enron to Enron Creditors Recovery Corp., and emphasized reorganizing and liquidating certain operations and assets of the pre-bankruptcy Enron. On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. (now AEI).
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.