...that there were actually more cons than pros. * * As mentioned in the report LIBOR has been the catalyst for fraud and unfair play in the past years. This being said I cannot see this reform in LIBOR go the right way for either party. The FED might have already lost the trust of many people around the world with the scandals of late that have taken place. Many people were hurt when they took out loans and LIBOR was artificially high. However, when LIBOR was artificially low people paid less than they should have. This is a small example on the controversy of whether or not LIBOR should be reformed or completely thrown out the window. * * LIBOR is a very important index, which serves as a benchmark for derivatives. Being the most widely used interested rate in the world, it is not easy to just throw it out the window, as many people who were on the brunt of the scandal would wish. * * I believe that LIBOR is not as risk-free as we think it is. I believe that the scandals that were taken place proved that. Many people lost their savings and not only were the savings lost, but the banks that were the cause of the scandal were stealing it. This, I believe speaks for itself to answer the question if LIBOR is as risk-free as we think it is. I believe we were led to believe that is was a fixed fair rate, however we have seen that it can be manipulated and artificially fixed in ways in which we can lose our money. This is a big reason why I believe...
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...scandalous and creates wide seethe and uproar from the public who are the ultimate victims of these scandals. For many reformers and speakers it may take ages to bring a matter of public concern in front of people, which when scandalized became notoriously famous without any help. For example wiki leaks had generated mass curiosity around the world about the facts and events which were otherwise completely obscure and esoteric to general public. With increased freedom of the forth estate everything is out in the open ,all political scandals ,social scandals and even financial scandals are watched ,scrutinized and are brought to justice. In the 21st centaury where social networking has dissolved all the known physical boundaries, a scandal of one country is a popular talk of another continent, people discuss ,debate and provide solution to the problem which arose because of the so called scandal, which we can never imagine happening half a century ago. The Bernie Madoffs in famous embezzlement scandal has created waves of dissatisfaction among the masses, and demanded higher level of probe and investigation in the matter. The Italian prime minister’s sex scandal has stumped the world and raised questions about the moral conduct about the leader. No reformer or speakers could have generated such wide spread awareness about a issue or a problem within the society .Thus scandals play a major roles in generating general awareness and finding root cause for a problem ,which...
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...Mr. May APLAC December 16 2012 Jack Abramoff Corruption in governments inspires frantic media coverage and people to lose faith in politics. The United States has a long history of these scandals that has initiated some concern about the way the government is run. Jack Abramoff, a once powerful lobbyist, was recently involved in one of the largest scandals in Washington. Abramoff rose from, generally, nothing to becoming America’s most notorious lobbyist. When scandal ultimately cast him down, Abramoff was sentenced to four years in federal prison for fraud, tax evasion, and conspiracy. While serving his term in jail, he had received vile and harsh insults that depicted him as “scum” and “evil.” Now released from the penitentiary, Abramoff is the author of the novel Capitol Punishment. By writing this book, he tries to expose the truth about the broken the U.S. Government system really is but also justify his actions and hope to redeem little pieces of his honor. Using clever diction, syntax, and numerous appeals to pathos, Jack Abramoff attempts to repent for his actions and gain redemption. Abramoff’s diction allows for the audience to view his actions in an alternative more positive direction, rather than maliciously and with anger. The first few chapters of the book describe his childhood and formative years. His conservative principles and his calculating self brought him early spotlight and success in the political realm. Abramoff, for about the first half of his...
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...leave room for interpretations and the standards never change, which give the impression that there cannot be many, if any, grey area’s which would allow for human judgment to take place. Actually nothing can be further from the truth and as I grew within the army I began to see a natural competition and even a division among the different services in the areas of moral and ethical standards, although all of us fight the same fight there is still a recruiting battle that exist to find, sign and train the best people possible from the civilian ranks and anytime you have that element ,it will cause potential members to “choose sides”. Each of our services has suffered through many different scandals over ethical dilemmas. The Navy in 1991 suffered the infamous “Tailhook Scandal” where Lt. Rebecca Hansen, a trainee helicopter pilot charged that her failing grades were in direct retaliation for her bringing charges against a flight instructor, and later when Gulf War Hero and then Vice Chief of Naval Operations, Admiral Stanley Arthur, ruled against her, she then reported the incident to Senator David Durenberger of Minnesota who in turn as the New York Times, Goodman, W. (1996) reported “blocked Commander Robert E. Strumpf’s appointment to the Commander of the Navy in the Pacific”, which is the largest operational...
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...The issue is about scandals and focusing attention on problems. The statement about whether scandals are more useful than speakers or reformers in focusing attention on problems is a complex one. Scandals have both a good side and a bad side in the process of revealing problems. And speakers and reformers are irreplaceable by scandals. On the one hand, scandals are useful to attract the public attention to the seriousness of the problem such as corruption, food safety and murder which is hard to be tackled by speaker and reformer in China. Scandals, which reflect the ugliness of human nature, provide a valuable clue to trace back to the source of the problems. Take an example from China to illustrate this point, Zhengfu Lei, whose sex media was leaked out from the internet firstly, was soon caught with discovery of corruption. Surprisingly, He was considered to be a decent official in the past years. It can be seen the power of scandal in this example. Corruption is ubiquitous in the world, and laws cannot bring the criminals to justice easily and effectively without the help of scandals. Even if speakers and reformers racked their minds, it cannot rival a small story of scandals. On the other hand, scandals will also move the public attention from the real matter itself to something largely irrelevant. Sometimes people are more interesting in the scandals than tackling problems when the problem is not so big or it doesn’t have detrimental to their interests. For example...
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...invented the trading of communications, power, and weather securities. It dominated the trading and instead of being successful, it became the largest financial scandal in history as a symbol of well-planned corporate fraud. Enron created the phony California electricity crisis. There was never a shortage of power in California. Phone recordings between Enron traders and California power plant operators reveal the traders asking plant managers to "get a little creative" in shutting down plants for "repairs." About 30 to 50 percent of California's energy plants shut down as suggested by the traders as Enron drove the price of electricity nine times higher. By November 2001, after a series of scandals associated with their accounting practices, Enron stood at the edge of the largest bankruptcy in history. Enron was thought to be a blue chip stock but there bankruptcy caused a terrible event in the financial world. The executives at Enron were indicted on different charges and were sent to prison. Employees and stockholders lost billions of dollars, while the lawsuits provided very little money in return. Because of this scandal, new regulations were developed to improve the reliability of the financial reporting and require the accounting firms to be independent of their clients. The regulations should prevent the scandal experienced with...
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...Memo of law Question/Issue Presented What evidence can be found during a legal discovery and how does this affect the record-keeping policy of a business organization? Applicable Law and Ethical Standards Newby v. Enron Corp. , 2002 U.S. Dist. LEXIS 28397 (S.D. Tex. May 1, 2002) Newby v. Enron Corp. (In re Enron Cor... , 2003 U.S. Dist. LEXIS 1668, Fed. Sec. L. Rep. (CCH) P92404 (S.D. Tex. Jan. 28, 2003) United States v. Arthur Andersen LLP , 2002 U.S. Dist. LEXIS 26870 (S.D. Tex. May 24, 2002) 18 USCS § 1512 Discussion/Analysis (of Law and Facts) During a legal discovery which includes the procedures of Deposition, Interrogatories and Production of Documents there can be different evidence found depending on the area of work the business organization is involved in. An example could be that a company tried to create false documents with the intent to seem like a good investment or to avoid paying taxes. During a deposition evidence can be found that people questioned tell conflicting stories. It is crucial to be able to deliver the right documents requested during a discovery. Therefore, it is important to have an organized record-keeping policy for any organization. Furthermore, a business should keep its records as correct as possible and not be tempted to give in to fraud, changing documents or destroying important documents. A company should follow the law to keep the required documents. It would be a crime to hide, destroy and/or withhold subpoenaed...
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...Final Paper: Case Study of WorldCom Financial Statement Fraud Introduction This paper will discuss the financial statement fraud committed by WorldCom by examining what led up to the fraud, who committed it and why, and the impact it caused on various stakeholders and the economy. WorldCom applied aggressive and undisclosed accounting tactics to provide financial statements that reflected a $10 billion profit for the years 2000 and 2001, rather than the actual combined loss of $73.7 billion that occurred (Romar, 2006). Opportunity, pressure, and rationalization were all present in this severe example of financial statement fraud which had a devastating impact on stakeholders globally. Basis for Understanding Financial Statement Fraud Prior to taking a deep dive into this specific example, it is important to first understand what constitutes financial statement fraud. Financial statement fraud can be defined as “deliberate misstatements or omissions of amounts or disclosures of financial statements to deceive financial statement users, particularly investors and creditors” (Wells, 2011, p. 299). Financial statement frauds can be broken down into five distinct categories: fictitious revenues, improper asset valuations, concealed liabilities and expenses, timing differences, and improper disclosures” (Wells, 2011, p. 292). The History of WorldCom “WorldCom began in Mississippi as a small provider of long distance telephone services” (Lyke, 2002). However, due to deregulation...
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...how to hide the debts and only show where there were profits. Falsifying documents and shredding of reports to hide what they didn’t want investors & employees to see as well. Senior executives cashing out their stocks to make millions for themselves and telling the rest of the company that they cannot cash out theirs, that it’s for the sake of the company to keep being invested. At the cost of the employees and investors, the executives were unethical, breaking the rules of the SEC and seek to gain it all for themselves, this is “self-interest” and illegal. They knew what they were doing, especially when it was reported by an Enron accountant saying she was “incredibly nervous that we will implode in a wave of accounting scandals.” They never warned employees or the public of their problems, but instead Chairman Ken Lay lied to the staff. A distribution email was sent by him to the staff stating, “Our performance has never been stronger; our business model has never been more robust; our growth has never been more certain…I can...
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...As the internal accountant for XYZ, Inc. it is my responsibility to inform you that I do support the full financial review prior to submitting our bid to the United States government. I have provided four major reasons why we should have a full financial review. Each of these four reasons is listed below as to why it is important to take action and take advantage of a full financial review. 1) The impact of occupational fraud and abuse on the company. Occupational fraud and abuse can financially damage a company. The term “occupational fraud” is defined as “The use of one’s occupation for personal enrichment through deliberate misuse or misapplication of the employing organization’s resources or assets.” There are three common types: Asset misappropriation (larceny, skimming); corruption (kickbacks, extortion); and fraudulent statements (financial statements, employment credentials)” (Akron/Canton, 2012). Without the knowledge of occupational fraud and abuse a company’s bottom line could be seriously affected. Not only does occupational fraud and abuse affect a company’s bottom line, but it can also affect employee morale, and customer loyalty. Undetected fraud and abuse can and has destroyed companies in the past and we as a company should make sure this does not happen. 2) U.S. governmental oversight of accounting fraud and abuse and its effect on the company. The United States government has implemented rules and regulations to handle occupational fraud...
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...Bernard Mitchell Jr. Forensic Accounting Prof. Steffel May 23, 2013 The Forensic Accountant What is a forensic accountant? There are many attributes that are needed to be a forensic accountant. Bolgna and Linquist (1995) defined forensic accounting as the application of financial skills and an investigative mentality to unresolved issues, conducted within the context of the rules of evidence. In 2011, a definition in Accountancy Ireland, noted: “Forensic accounting has been defined as "the science of gathering and presenting financial information in a form that will be accepted by a court of jurisprudence against perpetrators of economic crimes". The field integrates accounting, auditing and investigative competences to detect and prevent financial irregularities in business. (Idowa, 2011). This is a growing field so the definition will grow continuously over time. There is a great deal of gathering information included in being a forensic accountant. The biggest skill is having above average skill when it comes to looking for details. Each detail has to be exact in order when being presented during a case. In order to be successful you have to have a drive that keeps you thirsting for the truth. Anytime that you have to go looking through documents and other financial information you have to pay close...
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...Regardless of the term accounting in forensic accounting, the discipline isn’t related to simply reading financial statements that are available to the public or dealing with other accounting issues; the usual accountants, portfolio managers, investment analysts, and etc. already do the regular financial tasks. Instead, forensic accounting scrutinizes the financial documents that are internal which aren’t readily available to the public; these documents are usually considered in litigation affairs. Generally, the field of accounting was undergoing a major overhaul; before the recent economic crisis that has devastated some parts of the western world, the accounting scandals regarding WorldCom and Enron pushed the field towards change. Accounting in general was put under scrutiny as a result of increasing white collar crime and the economic crisis pushed that process even faster and further. Ergo, there was an increasing need to have forensic accountants and the field in general needs proper development in its education system and practice for it to be effective. Overall, the laws of the developed world favor the ones who commit white collar crimes rather than a person robbing a convenience store with a gun. The problem with policymaking in the current democratic regimes is that it’s a paradox that allows white collar crimes like WorldCom and Enron to get away or only end up with a milder outcome than the robbers who may physically go out and do it with a gun. Of course, debating...
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...Enron’s Failure Daphine Carter Leadership -LDR/531 July 18, 2012 Lorinzo Foxworth, DM Enron’s Failure Abstract Enron was the world’s top electrical, communications, pulp and paper, and natural gas company. Unfortunately, due to poor leadership and unethical decisions Enron failed to remain a stable and productive company. Enron due to a misrepresentation of funds found itself on the brink of bankruptcy. The company stock was worthless and within a short period of time has gone down by 89.00 per share. A scandal was revealed that involved the companies own accounting firm, Arthur Anderson, and Enron. The unethical practices of Enron were discovered in 1990 resulting in an investigation, which included finding out why stock prices being manipulated. This paper will identify the failures of the management and leadership of this company, how correct and positive organizational behavior and leadership of the management team would have affected the configuration of the now disgraced company. (Cernusca, 2011). Organizational Behavior Theories Enron’s failure could easily be predicted if the company ensured that the accountants and leaders were following the code of ethics set forth by the company. They adopted unethical practices like using unconsolidated affiliate companies for financial purposes and omitted expenses that were in the amount of billions of dollars. Enron...
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...Self-Esteem over Logic and Beliefs Columbia College, Missouri Abstract Self-Esteem gives a person the right to value themselves. Our self-esteem sometimes overpowers our logic, and can lead us to act in ways that are not always our own. This paper examines how the following theories; Theory of Cognitive Dissonance, Self- Evaluation Maintenance Theory, Self-Affirmation Theory, Rationalization Trap and Self-Discrepancy Theory impact a person's self-esteem decisions. Where people in different cases come to realize that the choices they have made overpower their superior perfect logic, they have to deal with the consequences that come along with the choices they have made. Self-Esteem over Logic and Beliefs According to Cherry (2010), “self-esteem is how a person values oneself”. It is a personality trait which comes from the inside of a person. It is all about what one believes about his/her looks, emotions, and behavior. It is an extremely essential need in a person so they can behave normally and be socially healthy. Self-esteem is intertwined with a person’s thoughts, and can also be called self-worth, self-respect or self-value. According to Kruger and Dunning (1999), “People often hold overly complimentary opinions of their abilities in many social and intellectual domains.” Many individuals end up doing things wrong without even realizing it, for the sake of a positive self-esteem. This paper will give examples of behavior that throw logic and common sense...
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...REPORT OF INVESTIGATION BY THE SPECIAL INVESTIGATIVE COMMITTEE OF THE BOARD OF DIRECTORS OF WORLDCOM, INC. Dennis R. Beresford Nicholas deB. Katzenbach C.B. Rogers, Jr. Counsel Wilmer, Cutler & Pickering Accounting Advisors PricewaterhouseCoopers LLP March 31, 2003 I. SUMMARY AND CONCLUSIONS ................................................................................. 1 A. The Nature of the Accounting Fraud....................................................................... 9 1. 2. B. C. D. E. Reduction of Reported Line Costs .............................................................. 9 Exaggeration of Reported Revenues ......................................................... 13 WorldCom’s Culture ............................................................................................. 18 Compromising Financial Arrangements ............................................................... 24 Why WorldCom’s Auditors Did Not Discover the Fraud..................................... 25 WorldCom’s Governance...................................................................................... 29 1. 2. 3. 4. Board’s Lack of Awareness of Accounting Fraud .................................... 29 Adequacy of Board’s Oversight of Company ........................................... 30 Stock Sales ................................................................................................ 33 Lease of Airplane to Chairman of Compensation Committee ......
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