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Encyclopedia > Accounting scandals

Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. 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. A political scandal is a scandal in which politicians engage in various illegal or unethical practices. ... Corporate abuse refers to incidents that involve unethical behavior on behalf of a corporation; a case of corporate abuse may be a scandal, fraud, or negligence toward the corporations employees and/or the local community. ... Corporate redirects here. ...


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. Creative accounting and earnings management are euphemisms referring to accounting practices that may or may not follow the letter of the rules of standard accounting practices but certainly deviate from the spirit of those rules. ... Look up oversight in Wiktionary, the free dictionary. ... The U.S. Securities and Exchange Commission, commonly referred to as the SEC, is the United States governing body which has primary responsibility for overseeing the regulation of the securities industry. ...


In 2002, a wave of separate but often related accounting scandals became known to the public in the U.S. All of the leading public accounting firms—Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG, PricewaterhouseCoopers— and others have admitted to or have been charged with negligence in the execution of their duty[citation needed] as auditors to identify and prevent the publication of falsified financial reports by their corporate clients which had the effect of giving a misleading impression of their client companies' financial status.[citation needed] In several cases, the monetary amounts of the fraud involved are in the billions of USD. For album titles with the same name, see 2002 (album). ... For the U.S. Supreme Court case commonly known as Arthur Andersen, see Arthur Andersen LLP v. ... Deloitte Touche Tohmatsu is one of the Big Four auditors. ... Ernst & Young is one of the largest professional services firms in the world, and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu (Deloitte) and KPMG. Ernst & Young is a global organization consisting of many member firms. ... KPMG is one of the largest professional services firms in the world. ... A PwC office building (Southwark Towers) in London, England. ... One thousand million (1,000,000,000) is the natural number following 999,999,999 and preceding 1,000,000,001. ... The United States dollar is the official currency of the United States. ...

Contents

List of companies involved in scandals

Big Four major audit firms

(Audit firms are listed, followed by select clients ensnarled by accounting scandals) The Big 4, sometimes written as the Big Four, is a group of international accountancy and professional services firms that handles the vast majority of audits for publicly traded companies as well as many private companies. ... Audit can refer to: Telecommunication audit Financial audit Performance audit Completion of a course of study for which no assessment is completed or grade awarded; especially audit is awarded to those who have elected not to receive a letter grade for a course in which letter grades typically awarded. ...

Deloitte Touche Tohmatsu is one of the Big Four auditors. ... Adelphia Communications Corporation, named after the Greek word brothers, was the fifth largest cable company in the United States before filing for bankruptcy in 2002 due to internal corruption. ... AES Corporation AES (NYSE) is a Fortune 1000 company that generates and distributes electrical power. ... Corporate Headquarters in Charlotte, North Carolina Duke Energy NYSE: DUK, headquartered in Charlotte, North Carolina, is an energy company with assets in the United States (primarily North and South Carolina), Canada and Latin America. ... El Paso Corporation is a major North American natural gas producer and distributor. ... Merrill Lynch & Co. ... Reliant Energy, Inc. ... Image:Riteaidcxworld. ... Parmalat logo. ... Ernst & Young is one of the largest professional services firms in the world, and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu (Deloitte) and KPMG. Ernst & Young is a global organization consisting of many member firms. ... Time Warner Inc. ... Dollar General (NYSE: DG) is a chain of limited-selection consumable retail stores operating in 30 U.S. states. ... PNC Bank is the flagship subsidiary of PNC Financial Services. ... Cendant Corporation was a New York-based provider of business and consumer services, primarily within the real estate and travel industries. ... HealthSouth Corporation NYSE: HLS, based in Birmingham, Alabama, is one of the USs largest healthcare services provider. ... KPMG is one of the largest professional services firms in the world. ... Citigroup Inc. ... CA, Inc. ... GE redirects here. ... ImClone Systems Incorporated (NASDAQ: IMCL) is a biopharmaceutical company dedicated to developing biologic medicines in the area of oncology. ... Peregrine Falcon Peregrine Investments Holdings Limited Peregrine Systems Peregrine is also a name and means wanderer This is a disambiguation page — a navigational aid which lists pages that might otherwise share the same title. ... Xerox Corporation (NYSE: XRX) is an American document management company, which manufactures and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies. ... Siemens AG (ISIN: DE0007236101, FWB: SIE, NYSE: SI) is one of the worlds largest companies and Europes largest engineering firm. ... A PwC office building (Southwark Towers) in London, England. ... Bristol-Myers Squibb NYSE: BMY, colloquially referred to as BMS, is a pharmaceutical corporation, formed by a 1989 merger between pharmaceutical companies Bristol-Myers Company and Squibb Corporation. ... Human placental lactogen (HPL), also called human chorionic somatomammotropin, is a polypeptide placental hormone. ... J.P. Morgan Chase & Co. ... This article does not cite any references or sources. ... In 1996, AT&T spun off its Systems and Technology units, along with the famous Bell Laboratories, to form a new company named Lucent Technologies (NYSE: LU). ... MicroStrategy is a business analysis software tool. ... McAfee, Inc. ... The New NKF under new management. ... Tyco has been used as the name for a number of distinct companies: Tyco International is a Bermuda-based conglomerate. ...

Predecessor and other U.S. audit firms

For the U.S. Supreme Court case commonly known as Arthur Andersen, see Arthur Andersen LLP v. ... Enron Creditors Recovery Corporation, formerly Enron Corporation, is a defunct U.S. energy company based in Houston, Texas. ... Global Crossing Ltd. ... Halliburton Energy Services (NYSE: HAL) is a multinational corporation with operations in over 120 countries. ... Martha Stewart Living Omnimedia Inc. ... Merck & Co. ... Peregrine Falcon Peregrine Investments Holdings Limited Peregrine Systems Peregrine is also a name and means wanderer This is a disambiguation page — a navigational aid which lists pages that might otherwise share the same title. ... Qwest Communications International Inc. ... Look up sunbeam in Wiktionary, the free dictionary. ... Waste Management, Inc. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... David Duncan (born 1960), is the United States governments star witness in the Arthur Andersen trial. ... Coopers & Lybrand was an accounting firm which merged in 1998 with Price Waterhouse to form PricewaterhouseCoopers. ... Phar-Mor was a U.S. chain of discount drug stores, based in Youngstown, Ohio and founded by Michael I. Monus (usually called Mickey Monus) and David S. Shapira in 1982. ... Coopers & Lybrand was an accounting firm which merged in 1998 with Price Waterhouse to form PricewaterhouseCoopers. ... ... A PwC office building (Southwark Towers) in London, England. ... Grant Thornton LLP encompasses the US operations of Grant Thornton International, one of the largest accounting organizations outside of the Big Four (Deloitte Touche Tohmatsu, Ernst & Young, KPMG, and PricewaterhouseCoopers). ...

Accounting scandals by year first reported

Andrew Fastow) Nugan Hand Bank was an Australian merchant bank that collapsed in 1980 in sensational circumstances amongst rumors of CIA involvement. ... Barry Minkow (born March 17, 1967) was an American teenage entrepreneur who managed to present the front of a successful businessman for a number of years during the 1980s. ... MiniScribe was a manufacturer of disk storage products, founded in Longmont, Colorado in 1980. ... // Polly Peck International (PPI) was, until around 1979, a barely profitable United Kingdom ragtrade textile company. ... BCCI in London was closed by the Bank of England in 1991 after evidence emerged of fraud and money laundering. ... Phar-Mor was a U.S. chain of discount drug stores, based in Youngstown, Ohio and founded by Michael I. Monus (usually called Mickey Monus) and David S. Shapira in 1982. ... Cendant Corporation was a New York-based provider of business and consumer services, primarily within the real estate and travel industries. ... Xerox Corporation (NYSE: XRX) is an American document management company, which manufactures and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies. ... It has been suggested that Gupta Technologies be merged into this article or section. ... One. ... Enron Creditors Recovery Corporation, formerly Enron Corporation, is a defunct U.S. energy company based in Houston, Texas. ... Jeffrey Keith Jeff Skilling (born November 25, 1953) was the CEO of Enron Corporation in 2001. ... Kenneth Lee Ken Lay (April 15, 1942 – July 5, 2006), was an American businessman, best known for his role in the widely-reported corruption scandal that led to the downfall of Enron Corporation. ... Andrew Stuart Fastow (born 22 December 1961) was the chief financial officer of Enron Corporation until the U.S. Securities and Exchange Commission opened an investigation into his conduct in 2001. ...


2002 scandals

Image File history File links Circle-question-red. ... Image File history File links Unbalanced_scales. ... It has been suggested that AOL search data scandal be merged into this article or section. ... Adelphia Communications Corporation, named after the Greek word brothers, was the fifth largest cable company in the United States before filing for bankruptcy in 2002 due to internal corruption. ... Bristol-Myers Squibb (NYSE: BMY), colloquially referred to as BMS, is a pharmaceutical corporation, formed by a 1989 merger between pharmaceutical companies Bristol-Myers Company, founded in 1887 by William McLaren Bristol and John Ripley Myers in Clinton, NY (both were graduates of Hamilton College), and Squibb Corporation. ... CMS Energy (also known as just CMS) NYSE: CMS is a public utility supplying electric power and natural gas to most of Michigan. ... CA, Inc. ... Corporate Headquarters in Charlotte, North Carolina Duke Energy NYSE: DUK, headquartered in Charlotte, North Carolina, is an energy company with assets in the United States (primarily North and South Carolina), Canada and Latin America. ... Dynegy is a large operator of power plants and a player in the natural gas liquids business, based in Houston, Texas. ... El Paso Corporation is a major North American natural gas producer and distributor. ... Enron Creditors Recovery Corporation, formerly Enron Corporation, is a defunct U.S. energy company based in Houston, Texas. ... The Federal Home Loan Mortgage Corporation (Freddie Mac) (NYSE: FRE) is a stockholder-owned, publicly-traded company chartered by the United States federal government in 1970 to purchase mortgages and related securities, and then issues securities and bonds in financial markets backed by those mortgages in secondary markets. ... Global Crossing Ltd. ... Halliburton Energy Services (NYSE: HAL) is a multinational corporation with operations in over 120 countries. ... Harken Energy Corporation is an American oil and gas company, having its headquarters in Southlake, Texas. ... ImClone Systems Incorporated (NASDAQ: IMCL) is a biopharmaceutical company dedicated to developing biologic medicines in the area of oncology. ... new Kmart logo Kmart Corporation was a US based corporation until it merged with Sears Holdings in November 2004. ... On September 30, 1996, AT&T spun off its Systems and Technology units (AT&T Technologies, Inc. ... Merck & Co. ... Merrill Lynch & Co. ... Mirant is an energy company headquartered in Atlanta. ... Peregrine Systems, Inc. ... Qwest Communications International Inc. ... Reliant Energy, Inc. ... Sunbeam Products is an American company that has produced electric home appliances since 1910. ... Tyco International Ltd. ... Waste Management, Inc. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ...

Later scandals

Ahold, (in full Koninklijke Ahold N.V., Royal Ahold N.V.), (Euronext: AH, FWB: AHO, NYSE: AHO, SWX: AHO) is a major international supermarket operator and foodservice company based in Amsterdam in the Netherlands. ... Parmalat logo. ... Calisto Tanzi (born 1938 in Italy) is an Italian businessman notorious for embezzling an estimated eight-hundred million euros from Italian company Parmalat, which led to their downfall. ... HealthSouth Corporation NYSE: HRC, based in Birmingham, Alabama, is the USs largest healthcare services provider. ... American International Group, Inc. ...

Outcomes

The Enron scandal resulted in the indictment and criminal conviction of the Big Five auditor Arthur Andersen on June 15, 2002. Although the conviction was overturned on May 31, 2005 by the Supreme Court of the United States, the firm ceased performing audits and is currently unwinding its business operations. The Big Four is a group of international accountancy firms that handle the vast majority of audits for publicly traded corporations. ... For the U.S. Supreme Court case commonly known as Arthur Andersen, see Arthur Andersen LLP v. ... is the 166th day of the year (167th in leap years) in the Gregorian calendar. ... For album titles with the same name, see 2002 (album). ... May 31 is the 151st day of the year (152nd in leap years) in the Gregorian calendar. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... Federal courts Supreme Court Chief Justice Associate Justices Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Counties, Cities, and Towns Other countries Politics Portal      The Supreme Court of the United States (SCOTUS) is the highest judicial body in the...


There was a general perception[citation needed] that there are other accountancy scandals waiting to be uncovered, which contributed[citation needed] to the 2002 stock market downturn. (Redirected from 2002 stock market downturn) The stock market downturn of 2002 (some say stock market crash) is the sharp drop in stock prices during 2002 in stock exchanges across the United States and Europe. ...


On July 9, 2002 George W. Bush gave a speech about recent accounting scandals that have been uncovered. In spite of its stern tone, the speech did not focus on establishing new policy, but instead focused on actually enforcing current laws, which include holding CEOs and directors personally responsible for accountancy fraud. is the 190th day of the year (191st in leap years) in the Gregorian calendar. ... For album titles with the same name, see 2002 (album). ... George Walker Bush (born July 6, 1946) is the 43rd and current President of the United States, inaugurated on January 20, 2001. ... Chief Executive Officer (CEO) is the job of having the ultimate executive responsibility or authority within an organization or corporation. ...


In July, 2002, WorldCom filed for bankruptcy protection, in the largest corporate insolvency ever. For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration - see text) in the UK. Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their... Insolvency is a financial condition experienced by a person or business entity when their assets no longer exceed their liabilities (commonly referred to as balance-sheet insolvency) or when the person or entity can no longer meet its debt obligations when they come due (commonly referred to as cash-flow...


These scandals reignited the debate over the relative merits of US GAAP, which takes a "rules-based" approach to accounting, versus International Accounting Standards and UK GAAP, which takes a "principles-based" approach. The Financial Accounting Standards Board announced that it intends to introduce more principles-based standards. More radical means of accounting reform have been proposed, but so far have very little support. The debate itself, however, overlooks the difficulties of classifying any system of knowledge, including accounting, as rules-based or principles-based. Generally accepted accounting principles (GAAP) are the accounting rules used to prepare financial statements for publicly traded companies and many private companies in the United States. ... International Financial Reporting Standards (IFRS), often known by the older name of International Accounting Standards (IAS) are a set of accounting standards. ... The Generally Accepted Accounting Principles in the UK, or UK GAAP, are the overall body of regulation establishing how company accounts must be prepared in the United Kingdom. ... The Financial Accounting Standards Board (FASB) is a private, non-for-profit organization whose primary purpose is to develop Generally Accepted Accounting Principles in the United States (US GAAP). ... Accounting reform is an expansion to accounting rules that goes beyond the realm of financial measures for both individual economic entities and national economies. ...


In 2005, after a scandal on insurance and mutual funds the year before, AIG is under investigation for accounting fraud. The company already lost over 45 billion US dollars worth of market capitalisation because of the scandal. This was the fastest decrease since the WorldCom and Enron scandals. Investigations also discovered over a billion US dollars worth of errors in accounting transactions. Future outcome for the company is still pending. Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... American International Group, Inc. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... Enron Creditors Recovery Corporation, formerly Enron Corporation, is a defunct U.S. energy company based in Houston, Texas. ...


On a lighter note, the 2002 Ig Nobel Prize in Economics went to the CEOs of those companies involved in the corporate accounting scandals of that year for "adapting the mathematical concept of imaginary numbers for use in the business world". This is a list of Ig Nobel Prize winners from 1991 to the present day. ... Flying frog. ...


See also

Corporate abuse refers to incidents that involve unethical behavior on behalf of a corporation; a case of corporate abuse may be a scandal, fraud, or negligence toward the corporations employees and/or the local community. ... A corporate scandal is a scandal involving allegations of unethical behavior by people acting within or on behalf of a corporation. ... The Savings and Loan crisis of the 1980s was a wave of savings and loan association failures in the United States in which over 1,000 savings and loan institutions failed in the largest and costliest venture in public misfeasance, malfeasance and larceny of all time. ... For a discussion of the legal actions for securities fraud in the United States under the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, see the Wiki entry for the Private Securities Litigation Reform Act. ... Forensic accounting is the specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or litigation. ... Before the signing ceremony of the Sarbanes-Oxley Act, President George W. Bush meets with Senator Paul Sarbanes, Secretary of Labor Elaine Chao and other dignitaries in the Blue Room at the White House July 30, 2002. ...

External links

For album titles with the same name, see 2002 (album). ... is the 190th day of the year (191st in leap years) in the Gregorian calendar. ... NPR logo For other meanings of NPR see NPR (disambiguation) National Public Radio (NPR) is a private, not-for-profit corporation that sells programming to member radio stations; together they are a loosely organized public radio network in the United States. ...

Further reading

  • John R. Emshwiller and Rebecca Smith, 24 Days: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America or Infectious Greed, HarperInformation, 2003, ISBN 0-06-052073-6
  • Zabihollah Rezaee, Financial Statement Fraud: Prevention and Detection, Wiley 2002.
  • Children of the Night, ISBN 142574995X, a novel about the effects accounting scandals have on people

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