Accouting Ethics
Review of Accounting Ethics
Accounting plays an important role for a wide range of business organizations worldwide. The integrity of the numbers matters for all businesses, profit and non profit
(Weygandt, 2012). In recent years past, we have learning of increasingly more companies who have been accused of engaging in unscrupulous accounting practices. As a result of the unethical practices, consumers and investors have begun to lose faith in companies, corporations, and banks. As many corporate executive from companies such Enron, WorldCom, and Tyco, were implicated in unethical accounting practices during the late 1990’s and early 2000’s, executives from Adelphia Communication Corporations did not escape the trend. The executives and senior management at Adelphia entered into transactions that blurred the lines between the employees’ financial interests and those of the company. The company guaranteed over $2 billion of loans to Rigas family members that were never repaid. Using corporate assets for personal gain is use is a direct violation of several restrictions under the GAAP (Weygandt, 2012).
Company History
In 1972, John Rigas bought a cable company in 1952 for $300 in Coudersport, Pennsylvania. In 1972, he and his brother Gus created Adelphia Communications Corporation. Adelphia is Greek for Brothers and was adopted as the name of the family run business. The Rigas brothers later purchased Century Communications for $5.2 billion which made it the 6th largest cable company in the United State with 5.6 million subscribers (Albrecht, 2005). At its peak, the Adelphia Corporation owned a hockey team, offered internet and cable services, and was a telephone and long-distance service provider.
Unethical Conduct
Adelphia backed $2.3 billion worth of personal loans to the Rigases. Family managers at the company doctored the books to pass audits and expectations and misleadingly inflate stock prices. The Rigases created shell companies
Accounting plays an important role for a wide range of business organizations worldwide. The integrity of the numbers matters for all businesses, profit and non profit
(Weygandt, 2012). In recent years past, we have learning of increasingly more companies who have been accused of engaging in unscrupulous accounting practices. As a result of the unethical practices, consumers and investors have begun to lose faith in companies, corporations, and banks. As many corporate executive from companies such Enron, WorldCom, and Tyco, were implicated in unethical accounting practices during the late 1990’s and early 2000’s, executives from Adelphia Communication Corporations did not escape the trend. The executives and senior management at Adelphia entered into transactions that blurred the lines between the employees’ financial interests and those of the company. The company guaranteed over $2 billion of loans to Rigas family members that were never repaid. Using corporate assets for personal gain is use is a direct violation of several restrictions under the GAAP (Weygandt, 2012).
Company History
In 1972, John Rigas bought a cable company in 1952 for $300 in Coudersport, Pennsylvania. In 1972, he and his brother Gus created Adelphia Communications Corporation. Adelphia is Greek for Brothers and was adopted as the name of the family run business. The Rigas brothers later purchased Century Communications for $5.2 billion which made it the 6th largest cable company in the United State with 5.6 million subscribers (Albrecht, 2005). At its peak, the Adelphia Corporation owned a hockey team, offered internet and cable services, and was a telephone and long-distance service provider.
Unethical Conduct
Adelphia backed $2.3 billion worth of personal loans to the Rigases. Family managers at the company doctored the books to pass audits and expectations and misleadingly inflate stock prices. The Rigases created shell companies
References: Albrecht, S., (2005). American Institute of Certified Public Accountants. The Adelphia Scandal. Retrieved from: http://www.aicpa.org/AccountingEducation/ Hurtado, P., (2012) Bloomberg Adelphia Fraud Funds Give More Than $728 Million to Victims. Bloomberg U.S. Securities and Exchange Commission SEC. (2002) SEC Charges Adelphia and Rigas Family with Massive Financial Fraud. 110 Retrieved from: http://www.sec.gov/news/press/2002-110.htm Weygandt, J.J., Kimmel, P.D., & Kieso, D.E. (2012). Financial Accounting. (8th ed.). Hoboken, NJ: John Wiley & Sons.