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ACCOUNTING SCANDAL

Some of the worst accounting scandals in history occurred in the previous two decades. Hundreds of billions of dollars were lost as a result of these financial disasters, which wrecked businesses and people’s lives. Many of these accounting scandals were the product of a few individuals’ overwhelming greed, which resulted in terrible repercussions that brought entire organizations down and impacted millions of people.

The ten largest accounting scandals in recent history are examined in this article

1.Waste Management Scandal (1998)

Trash Management Inc. is a publicly listed waste management firm based in the United States. A Maurice Meyers, the business’s new CEO, and his management team discovered the corporation had claimed almost $1.7 billion in false earnings in 1998.

Dean L Buntrock, the company’s owner and former CEO, was found guilty by the Securities and Exchange Commission (SEC), along with many other senior executives. In addition, the SEC penalized Arthur Andersen, Waste Management’s auditors, $7 million. A shareholder class-action lawsuit against Waste Management was finally resolved for $457 million.

2.Enron Scandal (2001)

Enron Corporation, established in Houston, Texas, was a multinational energy, commodities, and services corporation. In 2001, it was revealed that the corporation had been utilizing accounting loopholes to hide billions of dollars in bad debt while inflating the company’s revenues, in one of the most contentious accounting scandals of the last decade. Enron’s stock price fell from roughly $90 to under $1 in a year as a result of the scandal, resulting in a $74 billion loss for stockholders.

The company’s CEO, Jeff Skillings, and former CEO, Ken Lay, were found to have concealed billions of dollars in debt off the balance sheet, according to an SEC inquiry. They had also put pressure on Arthur Andersen, the company’s auditor, to disregard the problem.

3.WorldCom Scandal (2002)

WorldCom, situated in Ashburn, Virginia, was an American telecommunications firm. WorldCom was determined to have inflated its assets by about $11 billion in 2002, just a year after the Enron crisis, making it by far one of the greatest accounting scams ever.

By capitalizing rather than expensing line expenses, the corporation underreported them, and by creating bogus entries, it inflated its revenues. When the company’s internal audit department discovered about $3.8 billion in bogus accounts, the matter became public. Bernie Ebbers, the company’s CEO, was sentenced to 25 years in jail for fraud, conspiracy, and falsifying records. Over 30,000 jobs were lost as a result of the fraud, and investors lost over $180 billion.

4.Tyco Scandal (2002)

Tyco International, located in Princeton, New Jersey, was an American blue-chip security systems firm. Dennis Kozlowski, the firm’s CEO, and Mark Swartz, the company’s CFO, were found to have stolen over $150 million from the company and had overstated the company’s profitability by over $500 million in their reports in 2002. Unapproved loans and stock sales were used by Kozlowski and Swartz to siphon off money.

The issue was found when the SEC and the Manhattan District Attorney’s office conducted inquiries into the company’s dubious accounting procedures. Both Kozlowski and Swartz received sentences ranging from eight to twenty-five years in jail. They were obliged to pay $2.92 billion to investors as a result of a class-action lawsuit.

5.HealthSouth Scandal (2003)

HealthSouth Corporation, situated in Birmingham, Alabama, is a major publicly listed healthcare organization in the United States. The corporation was found to have exaggerated earnings by approximately $1.8 billion in 2003. Richard Scrushy, the CEO of HealthSouth, was previously under investigation by the SEC when he sold $75 million in stock a day before the firm reported a significant loss. Scrushy was acquitted of all 36 charges of accounting fraud despite being accused. He was convicted of bribing then-Governor of Alabama, Don Siegelman, and sentenced to seven years in jail.

6.Freddie Mac Scandal (2003)

The Federal Home Loan Mortgage Corporation, or Freddie Mac, is a US government-sponsored mortgage lender headquartered in Fairfax County, Virginia. In 2003, it was found that Freddie Mac had understated its revenue by more than $5 billion. Former Senior Vice Presidents Robert Dean and Nazir Dossani, as well as COO David Glenn, CEO Leland Brendsel, former CFO Vaughn Clarke, and former Senior Vice Presidents Robert Dean and Nazir Dossani, had purposefully exaggerated earnings in the company’s accounts. An SEC probe into Freddie Mac’s accounting methods exposed the issue. The corporation was fined $125 million and Glenn, Clarke, and Brendsel were all sacked.

7.American International Group (AIG) Scandal (2005)

The Federal Home Loan Mortgage Corporation, or Freddie Mac, is a US government-sponsored mortgage lender headquartered in Fairfax County, Virginia. In 2003, it was found that Freddie Mac had understated its revenue by more than $5 billion. Former Senior Vice Presidents Robert Dean and Nazir Dossani, as well as COO David Glenn, CEO Leland Brendsel, former CFO Vaughn Clarke, and former Senior Vice Presidents Robert Dean and Nazir Dossani, had purposefully exaggerated earnings in the company’s accounts. An SEC probe into Freddie Mac’s accounting methods exposed the issue. The corporation was fined $125 million and Glenn, Clarke, and Brendsel were all sacked.

8.Lehman Brothers Scandal (2008)

Lehman Brothers was a New York City, New York-based worldwide financial services corporation. It was one of the country’s most powerful investment banks. During the 2008 financial crisis, the business was determined to have concealed more than $50 billion in debts. Using accounting loopholes, these loans were disguised as sales.

The corporation has sold hazardous assets to banks in the Cayman Islands on a short-term basis, according to an SEC inquiry. These assets were expected to be bought back by Lehman Brothers. The corporation seemed to have $50 billion more in cash and $50 billion less harmful assets as a result of this. Lehman Brothers went bankrupt as a result of the incident.

9.Bernie Madoff Scandal (2008)

Bernie Madoff is a former American stockbroker who masterminded the world’s largest Ponzi scheme, as well as one of the greatest accounting scandals in history. Bernard L. Madoff Investment Securities LLC was run by Madoff. Madoff was determined to have defrauded investors out of about $64.8 billion after the 2008 financial collapse.

Madoff, his accountant David Friehling, and his second-in-command Frank DiPascalli were all found guilty of the accusations brought against them. The former stockbroker received a 150-year jail term as well as a $170 billion reparation decree.

10.Satyam Scandal (2009)

Satyam Computer Services was a Hyderabad-based Indian IT services and back-office accounting organization. The corporation was found to have exaggerated sales by $1.5 billion in 2009, marking one of the greatest accounting scandals in history.

Ramalinga Raju, the company’s founder and chairman, fabricated revenues, margins, and cash balances, according to a probe by India’s Central Bureau of Investigation. Raju acknowledged to the wrongdoing in a letter to the company’s board of directors during the inquiry. Despite the fact that Raju and his brother were accused with breach of trust, conspiracy, fraud, and fabrication of documents, the Central Bureau of Investigation failed to submit charges on time.

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