Synthesis On Effects Of Accounting Fraud
Executive Summary This paper objectify and evaluate the events that occurred prior (causes) and subsequent (outcome) to the fraud, and the accounting schemes employed to get the fraud done. It presents examples of companies who have used inappropriate accounting practices.
Enron, WorldCom, Tyco, HealthSouth and Adelphia were selected for analysis because of the availability of information regarding specific events occured before, during and after the fraud period as well as the ethical issues involved . There is abundant literature presented on the Enron and WorldCom scandal. Tyco, Adelphia, and HealthSouth were selected to expand and support the information available in the WorldCom and Enron cases.
Throughout the research process, the key findings collected suggest that:
• Plans and designs of a good ethical work culture already exists, their implementation is what companies failed to do and continued to monitor in the entire business operations.
• The scandals at all five firms involved fraudulent practices as well as a number of unethical activities carried out by top managers and executives (CEO, CFO, Chairman).
• Need and greed were the most motivating factor in committing fraud.
• Weak internal controls enabled these frauds to take place.
• It took 3-15 years before these frauds were being discovered.
• It is clear that by implementing a code of ethics and improving awareness of how other organizations have suffered from fraud and the lessons they have learned, an organization can become more proactive and put in place preventative and detective measures that can mitigate the extent and impact of fraud.
Introduction
Organizations of all types and sizes are subject to fraud. There are television and newspaper stories almost every day about all kinds of corporate schemes, scams and deceptions. . According to the Association of Certified Fraud Examiners (ACFE),
Enron, WorldCom, Tyco, HealthSouth and Adelphia were selected for analysis because of the availability of information regarding specific events occured before, during and after the fraud period as well as the ethical issues involved . There is abundant literature presented on the Enron and WorldCom scandal. Tyco, Adelphia, and HealthSouth were selected to expand and support the information available in the WorldCom and Enron cases.
Throughout the research process, the key findings collected suggest that:
• Plans and designs of a good ethical work culture already exists, their implementation is what companies failed to do and continued to monitor in the entire business operations.
• The scandals at all five firms involved fraudulent practices as well as a number of unethical activities carried out by top managers and executives (CEO, CFO, Chairman).
• Need and greed were the most motivating factor in committing fraud.
• Weak internal controls enabled these frauds to take place.
• It took 3-15 years before these frauds were being discovered.
• It is clear that by implementing a code of ethics and improving awareness of how other organizations have suffered from fraud and the lessons they have learned, an organization can become more proactive and put in place preventative and detective measures that can mitigate the extent and impact of fraud.
Introduction
Organizations of all types and sizes are subject to fraud. There are television and newspaper stories almost every day about all kinds of corporate schemes, scams and deceptions. . According to the Association of Certified Fraud Examiners (ACFE),
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