Corporate Accounting Scandals

Corporate accounting scandals occur with the revelation of transgressions by executives in big corporations. These transgressions usually involve complicated methods of misdirecting funds, misusing funds, understating expenses, underreporting liabilities, overstating corporate assets and overstating revenues. This type of accounting is fraud and is subject to investigations by government agencies like Securities and Exchange Commission of the United States.

One of the most popular accounting scandals in recent history was the Enron scandal of 2001. After several revelations of irregular procedures in accounting that bordered on fraud were carried out through the 90s that involved Enron and the accounting firm Arthur Andersen, the company was on the edge of the biggest bankruptcy in modern history. Upon the revealing of the Enron scandal, their stock dropped from more than $90 a share to just a few cents. This was one of the most disastrous and unprecedented events in the world of finance.

Another notable accounting scandal took place in March of 2003 involving HealthSouth Corporation located in Birmingham, Alabama. HealthSouth CEO and founder Richard M. Scrushy was accused of falsely inflating the company’s earnings by nearly a billion and a half dollars. Allegedly, the CEO told the senior officers in the company and the company’s accountants to falsify the reports of the company’s earnings to meet the expectations of investors in order to control company stock prices.

There may have also been incidents in history that involved tax accountant and possibly chartered accountant as well.

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