Accounting Fraud
Accounting Fraud: A White Collar Crime
Accounting Fraud: A White Collar Crime
The CEO and CFO of a Swiss security systems company named Tyco, stole 150 million dollars from their company before being caught in 2002. At the height of the scandal, the CEO threw a 2 million dollar birthday party for his wife on a private island with guest performer Jimmy Buffet. After being caught, the CEO and CFO were sentenced to 8-25 years in prison and Tyco had to repay its investors 2.92 billion dollars (The 10 Worst, n.d.).
In the last decade-and-a-half, accounting fraud has earned a place among the common themes in our culture. It’s prominence in today’s business world has led to changes in laws, stronger restrictions, and new methods for detection. Despite all these roadblocks, individuals within corporations still find ways to commit financial malfeasance for personal or corporate gain. The majority of the public is familiar with companies like Enron or WorldCom, whose wrongdoings in this matter were highly exposed to the public eye. Government sections, like the Security and Exchange Commission (SEC), have been continuously working to create programs and guidelines to restrict fraud, encourage whistleblowers, and expand the criminal prosecution for those who do commit fraud. By understanding the causes and complexities associated with accounting fraud, the court system along with the SEC can work to put laws in place to prevent fraud and punish those who commit it.
On paper, the term accounting fraud might seem very basic, however, in practice it can be accomplished in many numerous ways. In the article, “The Causes and Consequences of Accounting Fraud” by Mason Gerety and Kenneth Lehn, they suggest the term “disclosure violation” (Gerety, Lehn, 1997, p. 588) may be more appropriate. The authors continue by explaining that they originally attempted to create an all-inclusive data set incorporating all the ways accounting fraud has been committed, but the
Accounting Fraud: A White Collar Crime
The CEO and CFO of a Swiss security systems company named Tyco, stole 150 million dollars from their company before being caught in 2002. At the height of the scandal, the CEO threw a 2 million dollar birthday party for his wife on a private island with guest performer Jimmy Buffet. After being caught, the CEO and CFO were sentenced to 8-25 years in prison and Tyco had to repay its investors 2.92 billion dollars (The 10 Worst, n.d.).
In the last decade-and-a-half, accounting fraud has earned a place among the common themes in our culture. It’s prominence in today’s business world has led to changes in laws, stronger restrictions, and new methods for detection. Despite all these roadblocks, individuals within corporations still find ways to commit financial malfeasance for personal or corporate gain. The majority of the public is familiar with companies like Enron or WorldCom, whose wrongdoings in this matter were highly exposed to the public eye. Government sections, like the Security and Exchange Commission (SEC), have been continuously working to create programs and guidelines to restrict fraud, encourage whistleblowers, and expand the criminal prosecution for those who do commit fraud. By understanding the causes and complexities associated with accounting fraud, the court system along with the SEC can work to put laws in place to prevent fraud and punish those who commit it.
On paper, the term accounting fraud might seem very basic, however, in practice it can be accomplished in many numerous ways. In the article, “The Causes and Consequences of Accounting Fraud” by Mason Gerety and Kenneth Lehn, they suggest the term “disclosure violation” (Gerety, Lehn, 1997, p. 588) may be more appropriate. The authors continue by explaining that they originally attempted to create an all-inclusive data set incorporating all the ways accounting fraud has been committed, but the
References: Albrecht, W., Albrecht, C., & Albrecht, C. C. (2008). Current Trends in Fraud and its Detection. Information Security Journal: A Global Perspective, 17(1), 2-12. doi:10.1080/19393550801934331 Gerety, Mason, and Kenneth Lehn. "The causes and consequences of accounting fraud." Managerial and Decision Economics 18.7-8 (1997): 587-599. Print. Giroux, Gary. "What Went Wrong? Accounting Fraud and Lessons from the Recent Scandals." Social Research 75.4 (2008): 1205-1238. Ebscohost. Web. 15 Feb. 2014. RECENT LEGISLATION. (2002). Harvard Law Review, 116(2), 728. Sarbanes-Oxley Basics. (n.d.). Sarbanes-Oxley Basics. Retrieved February 17, 2014, from http://www.sox-online.com/basics.html The 10 Worst Corporate Accounting Scandals of All Time. (n.d.). Accounting- Degree.org. Retrieved February 20, 2014, from http://www.accounting- degree.org/scandals/ Verschoor, C. C. (2013). Whistleblowers Need Encouragement, not Roadblocks. Strategic Finance, 95(10), 12-61. Wilson, A. C., & Key, K. G. (2011). Enron Audit Failures: A Compromise of Ethics. Conflict Resolution & Negotiation Journal, (1), 100-112.