HealthSouth Impact on Stakeholders
HealthSouth Impact on Stakeholders
HealthSouth’s fraud impacted many of their stakeholders. Some of the stakeholders discussed below are the Directors and Management Team, external auditors Ernst & Young, the employees, the patients, and Chief Financial Officer Weston Smith.
The Board of Directors and Management team engaged in several conflict of interest actions. They were the first company to be charged under the Sarbanes Oxley Act of 2002; which holds financial executives more accountable by making them review and sign the financial statements. The SEC charged and found guilty, fifteen executives with accounting fraud they also admitted that they were a part of the fraud. If they had co-operated with the authorities the fraud would have been detected. Nobody wanted to decrease their wealth that occurred due to their unethical practices. According to (Lublin & Carms, 2003 para1) one of the directors, made a statement that they were not aware of what was going on. Their loss of accountability and transparency is obvious. They became oblivious to the fact that they were cheating investors of millions of dollars. Confusion is apparent because they did not know what was ethical anymore. Richard Scrushy was the mastermind behind this fraud. The Board of directors attested to the fact that Scrushy, should be held accountable. They eventually figured out his intentions and became aware that his scheme was not in the best interest of the company and the shareholders. Ms. Diane Henze, who was the former Vice President of finance realized what was going on and reported her suspicions to HealthSouth’s compliance department. Due to her suspicion and whistle blowing she was transferred to another division (Reeves, 2005). HealthSouth Board of Directors were not treated the same. Board leaders such as Larry D, Striplin Junior were treated favorably. He received contracts for millions of dollars, to install glass at a HealthSouth in 2002. According to Striplin his company
HealthSouth’s fraud impacted many of their stakeholders. Some of the stakeholders discussed below are the Directors and Management Team, external auditors Ernst & Young, the employees, the patients, and Chief Financial Officer Weston Smith.
The Board of Directors and Management team engaged in several conflict of interest actions. They were the first company to be charged under the Sarbanes Oxley Act of 2002; which holds financial executives more accountable by making them review and sign the financial statements. The SEC charged and found guilty, fifteen executives with accounting fraud they also admitted that they were a part of the fraud. If they had co-operated with the authorities the fraud would have been detected. Nobody wanted to decrease their wealth that occurred due to their unethical practices. According to (Lublin & Carms, 2003 para1) one of the directors, made a statement that they were not aware of what was going on. Their loss of accountability and transparency is obvious. They became oblivious to the fact that they were cheating investors of millions of dollars. Confusion is apparent because they did not know what was ethical anymore. Richard Scrushy was the mastermind behind this fraud. The Board of directors attested to the fact that Scrushy, should be held accountable. They eventually figured out his intentions and became aware that his scheme was not in the best interest of the company and the shareholders. Ms. Diane Henze, who was the former Vice President of finance realized what was going on and reported her suspicions to HealthSouth’s compliance department. Due to her suspicion and whistle blowing she was transferred to another division (Reeves, 2005). HealthSouth Board of Directors were not treated the same. Board leaders such as Larry D, Striplin Junior were treated favorably. He received contracts for millions of dollars, to install glass at a HealthSouth in 2002. According to Striplin his company