Suchergebnisse

• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 6: Bausch & Lomb (1994)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …estimates indicated that it might take some dis- tributors up to two years to sell the SVS lenses that CLD management was expect- Accounting Fraud in U.S… …After the scheme was discovered, company management replaced all Hong Kong personnel that it held responsible for the fraud. There was no evidence that… …Accounting Fraud in U.S. Companies 51 Case 6: Bausch & Lomb (1994) In the early 1990s, Bausch & Lomb, Inc. was a respected American company… …date. The accounting scandal led to the departure of several CLD executives, and it severely tested inves- Accounting Fraud in U.S. Companies 53… …received an anonymous letter from a group of concerned APD employees asserting the fraudulent booking of sales by local management. In response, a Bausch &… …“refreshed” with the aid of APD personnel who manually altered the computer-generated aging reports. Accounting Fraud in U.S. Companies 54… …down the line to make the numbers. The Commission’s view is that senior management has to be especially vigilant where the pressure to make the numbers… …: Financial Shenanigans – How to detect accounting gimmicks and fraud in financial reports, 2nd edition, Boston 2002, p. 89 Securities and…

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  Case 7: Waste Management (1997)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 55 Case 7: Waste Management (1997) The Waste Management case provides an anatomy of an accounting… …management to falsify the financial statements by plugging in the additional income needed to achieve the desired earnings for each Accounting Fraud in… …Management stock while the fraud was ongoing, they avoided losses. For example, in one instance, just ten days before certain of the accounting irregularities… …spree, and WMI’s results began to turn around. References: Albrecht, W. Steve: Fraud at Waste Management, www.aicpa.org/antifraud Mulford… …Executives Are Named in SEC Accusation, The New York Times, March 27, 2002 Former Waste Management officials face fraud lawsuit, St… …scandal that is far more than just a financial history lesson. It portrays a multiyear effort to inflate reported profits at Waste Management, Inc. (WMI)… …portrays an accounting fraud perpetrated by the highest-ranking officers at WMI. As the scheme unravelled in 1997, the news sent WMI’s stock value tumbling… …investments. Waste Management, Inc. was a Delaware corporation with its principal place of business in Oak Brook, Illinois. Through its subsidiaries, WMI… …services. During the early years of the 1990s, WMI began to dominate the field of waste management and trash hauling. By 1995, its sales exceeded USD 10… …that the auditors played a central role in allowing the fraud to continue. Year after year, Arthur Andersen complained about the efforts to inflate…

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  Case 8: Sunbeam (1998)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 61 Case 8: Sunbeam (1998) Sunbeam Corp., the Boca Raton, Florida-based maker of such well-known brands… …relied on question- able accounting gimmicks and outright fraud to enhance earnings. It happened under the direction of now disgraced CEO Albert J… …Accounting Fraud in U.S. Companies 62 million. “We are winning in every aspect of our business,” Dunlap told analysts in the conference call announcing… …the suppliers had no room for them; they would not be delivered and paid for Accounting Fraud in U.S. Companies 63 until spring. A similar… …partner, who asked the company to change its financial statements. But the company’s management refused to make most of the requested changes, and the… …be). SEC enforcement officer Thomas C. Newkirk noted that the fraud was engineered to dress up Sunbeam, in order to make the company look much more… …attractive than it actually was to potential buyers: “This Accounting Fraud in U.S. Companies 64 was a primer in the techniques of financial fraud, in… …from accounting fraud. Dunlap was ordered to pay a USD 500,000 fine and had to accept a lifetime ban from ever serving again as an officer or… …bestseller. Unknown to Sunbeam investors and to the Sunbeam board was that Dunlap had faced similar allegations of accounting fraud at a much smaller… …thereby concealed, when results improved later. Edwards also claimed that the accounting fraud had masked serious operating problems at Nitec. In 1982…

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  Case 9: Cendant/CUC (1998)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …president and COO. Commenting on the fraud, one FBI agent said: “Some people have referred to this as a case of earnings management. But this is an attempt… …Accounting Fraud in U.S. Companies 66 Case 9: Cendant/CUC (1998) The Cendant Corporation was formed in December 1997 by a merger of two com-… …creation of Cendant, a significant accounting fraud came to light at the CUC division. Before Enron, the case was considered the biggest accounting fraud… …ever. From its beginnings in 1983, the fraud was directed by Walter A. Forbes, CUC’s chairman and CEO, and his top lieutenant, E. Kirk Shelton, CUC’s… …Street analysts expected. In the earlier years, however, an important part of the fraud was improper revenue and expense recognition. CUC stated that its… …totally fictitious, including, for exam- ple, USD 500 million over the three-year period from fiscal 1995 to 1997. One fraud investigator commented: “It… …appears to have been simple. People just made things up.” In another scheme, CUC’s senior management imposed moratoriums on recognizing expenses at the… …extended amortization periods. By shifting current expenses to a later period, the company further inflated its reported earnings. Accounting Fraud in… …U.S. Companies 67 In later years, the fraud extended well beyond improper revenue and expense rec- ognition practices. As time went on and… …improperly charged asset write-offs and other operating expenses against these acquisition reserves. By far, the largest part of the CUC fraud came from…

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  Case 12: Enron (2001)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 80 Case 12: Enron (2001) Perhaps more than any other company facing scandal in recent years, Enron stands… …out as the poster child for corporate fraud. The crimes of Enron’s top executives resonated the most in the public mind, and the company’s name has… …become synonymous with corporate malfeasance. However, compared to other accounting frauds, the Enron fraud was very complicated; it involved many… …reports. They didn’t have to lie. All they had to do was to obfuscate it with sheer complexity – although they lied, too.” The impact of the fraud was… …since October 1929”. Besides, the fraud ushered in a wave of prosecutions against white-collar crime at the highest levels of American business, and it… …U.S. Accounting Fraud in U.S. Companies 81 borders; “Enron International”, a wholly owned subsidiary, was created to manage energy assets… …resigned, citing “personal reasons” (August 14); he was replaced once again by Kenneth Lay. Accounting Fraud in U.S. Companies 82 - Sherron Watkins… …Enron stock (October 17). Senior management, however, sold nearly USD 1 billion worth of company shares throughout the year. - The SEC opened inquiries… …transactions that involved setting up complex special purpose entities. Accounting Fraud in U.S. Companies 83 Enron’s financial reporting (I)… …Fraud in U.S. Companies 84 forward markets in the services Enron promised to provide; extremely optimistic numbers were simply conjured up out of…

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  Case 13: WorldCom (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …improve results when management felt this was needed. Governance failures at WorldCom The setting in which the fraud occurred was marked by serious… …senior management was final and not be challenged. Most of WorldCom’s people did not know that the fraud was occurring. Rather, it occurred as a result of… …fraud was not confined to Ebbers, Sullivan and Myers. Others at WorldCom either knew or suspected that senior management was engaged in improper… …Accounting Fraud in U.S. Companies 93 Case 13: WorldCom (2002) When Enron collapsed at the end of 2001, worried investors searched for who… …were managed. Former President George W. Bush condemned the fraud as “outrageous” and vowed to address the problems shaking Corporate America. The… …SEC said that WorldCom’s accounting improprieties were of “unprecedented magnitude”. But as enormous as the fraud was, it was accomplished in a… …relatively mundane way. The modus oper- andi of the fraud was rather simple, and it was carried out over a comparatively short period of time. Yet the… …reverberations of the fraud would echo around the world of business for years to come. Background: WorldCom from 1983–2002 The fraud was the consequence… …source of the culture that gave birth to this fraud. In 1983, he had discovered the telecom business and founded WorldCom. In the 1990s, the Clinton… …in this endeavour. Yet he continued to feed Wall Street’s expectations of double-digit Accounting Fraud in U.S. Companies 94 growth, and he…

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  Case 14: Dynegy (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 102 Case 14: Dynegy (2002) At the beginning of the new millennium, Houston-based Dynegy Inc. was a high-… …flying business rival of the Enron Corporation. Of course, the accounting fraud at Dynegy never reached the scale of notoriety of that at neighbouring… …downplayed the importance of the SEC investigation. The company said that “a new management focus was needed” and that the trades being investigated were… …positions generate no current cash flow (this treatment was required under US-GAAP). Accounting Fraud in U.S. Companies 103 In order to… …of the fraud caused Dynegy’s stock to plunge. Alpha’s impact on Dynegy’s financial statements was especially significant, because the statement of… …Dynegy’s lack of cooperation in the early stages of the investigation. Accounting Fraud in U.S. Companies 104 In August 2003, two of the three tax… …the most severe sentences for accounting fraud in recent memory. “I take no pleasure in sentencing you to 292 months, but my job is to follow the… …Alpha alone. Olis argued he didn’t personally benefit from the fraud scheme and had acted with the knowledge and approval of Dynegy’s financial… …case. Accounting Fraud in U.S. Companies 105 References: Securities and Exchange Commission: SEC v. Dynegy Inc., Litigation… …Dynegy Face Charges of Fraud, The New York Times, June 13, 2003 Jury convicts former Dynegy exec of fraud, The Houston Business Journal, November 14, 2003…

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  Case 15: Xerox (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 106 Case 15: Xerox (2002) For most of the second half of the 20th century, the Xerox Corporation was a… …management. In May 2000, Xerox made a public announcement that it had discovered accounting irregularities associated with its Mexican operations. CEO… …the problems became public, the Accounting Fraud in U.S. Companies 107 SEC launched an investigation into what happened at the Mexican… …audi- tors refused to sign off on the company’s annual report until they had rechecked the numbers. They said they had not uncovered any signs of fraud… …director Stephen Cutler said in a statement. “In a pattern of pervasive fraud, investors were misled and betrayed over the course of four years.” The alle-… …lessees. Accounting Fraud in U.S. Companies 108 Under US-GAAP, Xerox was required to book revenue from the box at the be- ginning of the lease… …recogni- tion”. But when the engagement partner challenged Xerox’s non-GAAP accounting practices, the company’s senior management told the audit firm that… …, and, according to KPMG, the potential tax exposure arising out of the transaction was Accounting Fraud in U.S. Companies 109 “remote to low”… …values of the machines by as much as 50%. Accounting Fraud in U.S. Companies 110 Xerox grew progressively dependent on these accounting… …itself as a business increasing its earnings every quarter and meeting its competitive challenges. Senior management repeat- edly told investors that…

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  Case 16: Tyco International (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 112 Case 16: Tyco International (2002) Under the leadership of CEO Dennis Kozlowski, Tyco International… …. Nevertheless, taken as a group, these 700 deals certainly had a material Accounting Fraud in U.S. Companies 113 impact on Tyco’s results. As a… …and employees with outsized compensation. Accounting Fraud in U.S. Companies 114 The SEC filed a separate but related civil lawsuit… …, charging Kozlowski, Swartz and Tyco general counsel Mark Belnick with grand larceny, conspiracy, corruption, securities fraud and falsifying business… …. Thus, this executive compensation was never disclosed. Accounting Fraud in U.S. Companies 115 In 2000, Kozlowski and Swartz engineered… …were “exceptional” and that Tyco’s management “prided itself on having a sharp focus with creating shareholder value”. Similarly, Swartz regularly… …Swartz indicated that they would appeal Accounting Fraud in U.S. Companies 116 the verdict. The pair had testified that they were unaware of… …securi- ties fraud, but was not sentenced to prison. Before the sentencing, Kozlowski had asked the judge to be as “lenient as possible” and to… …. district attorney told the judge that Kozlowski should not be shown any leniency: “He stole. He committed fraud. He committed perjury. And he engaged in a… …that could have uncovered the fraud. However, sources close to the Tyco investigation suggested that Kozlowski (who had trained as an auditor himself)…

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  Case 18: Qwest Communications International (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 122 Case 18: Qwest Communications International (2002) Denver, Colorado-based Qwest Communications… …revenue im- mediately rather than rateably. The fraud surfaced in the summer of 2002, after several critics had publicly ques- tioned why Qwest was… …billionaire investor Philip F. Anschutz (the company’s founder) resigned as chairman of the board. Accounting Fraud in U.S. Companies 123 The… …Wall Street that it used any means necessary to meet its “outrageously optimistic revenue projec- tions”. “Qwest senior management created a… …. “Accounting rules, policies or controls that in- terfered with meeting revenue targets were stretched or ignored outright, creating an environment for fraud… …employees inter- nally referred to such transactions as “one hit wonders”). When senior management realized that it could not meet the projected growth… …sales increased each quarter as senior management continued to project significant year-over-year and quarter-over-quarter revenue growth. In 2001, in… …that the company “reset expectations and put the best face on to Wall Street that we can”. However, senior management rejected a reset… …. Accounting Fraud in U.S. Companies 124 Eventually, Qwest understated USD 231 million in expenses from 1999 to 2002, relating to employee vacations… …former CEO Joseph Nacchio and six other execu- tives with engineering a “massive financial fraud” at the telecommunications com- pany. “This was definitely…

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