reliability of financial statements. The increasing rate of white-collar crimes demands stiff penalties and strong punishments. II. Introduction New laws and guidelines have helped reduce, but not eliminate fraud. Enron, WorldCom and HealthSouth scandals were detrimental to the public. Millions of dollars in investments the public made into those companies have been lost. The SEC (Securities and Exchange Commission) has taken a strong stance on fraud committed by
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Answer no 1 (a): How senior managers at WorldCom managed earnings: Senior manager of WorldCom (CFO, Scott Sullivan) has cooked up the earnings of the company by violating the two basic rule of accounting i.e. accrual and capitalization. They overstate the company pre-tax income by releasing the accrual balance to the income statement and by capitalizing the operating expenses in the books (Dick Thornburgh, 2004). As per the GAAP (generally accepted accounting principles), a company should required
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Score: 1. 60/100 Points 60 % Award: 10 out of 10.00 points Accounting is defined as the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties. ✓ True False References True / False 2. Learning Objective: 01-01 Define accounting. Award: 0 out of 10.00 points Which of the following is NOT part of the process of accounting
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Business Ethics: Enron Case Study Introduction Enron was a very powerful company that was doing very well in the market. The value of its share was high and the company was enjoying an overall healthy position as a business. The employees were happy and new recruits would have killed to get a job at Enron. However, this was not to last. Enron enjoyed so much success that it got to its head and it started making all sorts of problems. Enron decided to change its organizational structure by employing
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own accounting firms or be employed by lawyers, insurance companies, banks, or large corporations. The use of accountants has played an important role in assisting the government as well as the public. Forensic Accountants participate in detecting scandals and financial crimes caused by individuals, companies and organized crime networks. This profession consists of three main areas litigation support, investigation and dispute resolution (Harris, 200). Litigation support involves the factual arrangement
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It was suggested that the President had tried to repair the damages that were caused the Watergate scandal in the first article. From a speech President Nixon had given, it showed that there were a lot things that still needed to be done regarding the scandal. The article stated that the officials under the Watergate scandal were cheating, lying and engaging in illegal activities while in high positions of the government. The people believed that the president did not stand up to the crisis and
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Most Commonly Used and Most Effective Accounting Fraud Detection Method The stacked bar chart exhibits which between manual methods and automated methods is more commonly used and is more effective in detecting accounting frauds, according to the perception of accounting professionals in DLSU. Unexpectedly, majority of the accounting professors perceive (x [mean] = 2.06, σ [standard deviation] = 0.79) the most commonly used accounting fraud detection methods as manual in form. The reason
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Joe Elton Nixon was indicted in Leon County, Florida, for first-degree murder, kidnaping, robbery, and arson for the death of Jeanne Bickner. Nixon entered a plea of not guilty. During the opening statements of the trial, Nixon’s defense attorney, Michael Corin, stated that; “In this case, there won’t be any question, none whatsoever, that my client Joe Elton Nixon, caused Jeannie Bickner’s death…”. This statement, along with others made during the trial, were the basis for the appeal filed by Nixon
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Accounting is a profession that is vulnerable to ridicule because of the faith it requires from clients. When an accountant makes an error, he not only damages his own reputation but also impacts thousands of other people as well. WorldCom’s downfall began with one accountant who made an entry he knew was wrong and the result spread to the entire company of innocent bystanders. David Meyers’ false entry destroyed a company, but he was guilty only of being a victim of his circumstances. He was an
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In Scandals in Past and Contemporary Politics, edited by political scientist James Newell and historian John Garrard, a political scandal is defined as “a departure or lapse from the normative standards that guide behavior in public office.” A distinction is also made between substantive and procedural scandals. A substantive scandal involves a single, initial scandal, while a procedural scandal involves a cover up which becomes more controversial than the original scandal (Newell and Garrard 78)
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