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Accounting scandals
In 2002, a wave of accounting scandals broke in the United States. A number of leading companies have admitted to mis-stating their accounts, giving a misleading impression of their status. In public companies, this type of creative accounting can amount to fraud, and a series of investigations have been launched by the U.S. Securities and Exchange Commission. In several cases, the sums involved are in the billions of dollars.
Reported accounting scandals in 2002 to date:
Computer Associates --
Enron -- Kenneth Lay,
WorldCom -- Bernard Ebbers
Global Crossing --
Tyco --
Xerox
Halliburton -- Dick Cheney,
Bristol-Myers Squibb
Qwest Communications
ImClone Systems
Harken Energy / Published report 10-9-2002
Kmart
Lucent Technologies
HealthSouth
Freddie Mac
list others here
Some scandals in 2003 involving non-US companies:
Ahold
Parmalat
The Enron scandal has so far resulted in the criminal conviction of the Big Five auditor Arthur Andersen, and that firm has had to divest itself of its non-US partners.
There is a general perception that there are other accountancy scandals waiting to be uncovered, which has contributed to the 2002 stock market downturn.
On July 9, 2002 George W. Bush, the first US President to hold an MBA, gave a speech about recent accounting scandals that have been uncovered. In spite of its stern tone, the speech did not focus on establishing new policy, but instead focused on actually enforcing current laws, which include holding CEOs and directors personally responsible for accountancy fraud.
In July, 2002, WorldCom filed for bankruptcy protection, in the largest corporate insolvency ever.
These scandals have reignited the debate over the relative merits of US GAAP, with its...
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