Accounting
scandals are business scandals that arise from deliberate manipulation of
financial statements with the disclosure of economic offenses by trusted
officials of corporations or governments.
Why Accounting Scandals happen:
"Accounting scandals arise
because there is pressure to meet short-term market expectations in terms of
financial and share price performance."
Big Accounting Scandals:
From the last two decades, we
have seen some of the most acute accounting scandals in history. Billions of
dollars were dissipated as a result of these economic disasters, which ruined
companies and ruined peoples' lives. Several of these accounting
services in Dubai were a result of the extreme
greed of a few people whose actions commenced to disastrous consequences, which
brought down whole companies and affected millions of people. In this article,
we can analyze the ten biggest accounting scandals in recent times.
List of Accounting Scandals in
the Past Decades:
Enron Scandal (2001):
Enron Corporation was a US
energy, products, and Services Company based out of Houston, Texas. In one of
the most questionable accounting scandals in the past decade, it was found in
2001 which the company had been using accounting deceptions to hide billions of
dollars of bad debt, while simultaneously inflating the company's earnings. The
scandal resulted in stockholders losing over $74 billion as Enron's share price
collapsed from around $90 to under $1 within a year.
WorldCom Scandal (2002):
WorldCom was an American
telecommunications corporation based out of Ashburn, Virginia. In 2002, just
after one year of the Enron scandal, it was found that WorldCom had inflated
its assets by almost $11 billion, creating it by far one of the largest accounting
scandals ever.
Freddie Mac Scandal (2003):
Federal Home Loan Mortgage
Corporation, too known as Freddie Mac, is a United States federally-backed
mortgage financing titan based out of Fairfax County, Virginia. In 2003, it was
found that Freddie Mac had exaggerated over $5 billion in profits. COO David
Glenn CEO Leland Brendsel's previous CFO Vaughn Clarke and former Senior Vice
Presidents Robert Dean and Nazir Dossani had deliberately understated incomes
in the organization's books. The scandal appeared to light due to an SEC
inquiry into Freddie Mac's accounting methods. Glenn and Clarke, as
well as Brendsel, were all fired, and the company was penalized $125 million.
American International Group
Scandal (2005):
American International Group is a
US multinational insurance firm with over 88 million customers beyond 130
countries. In 2005, CEO Hank Greenberg was found liable for stock price
manipulation. The SEC's inquiry into Greenberg revealed a massive accounting
fraud of almost $4 billion.
Lehman Brothers Scandal (2008):
Lehman Brothers was a worldwide
financial services firm based out of New York City, New York. It was one of the
largest investment banks in the United States. During the 2008 financial crisis,
it was discovered that the company had hidden over $50 billion in loans. These
loans had been disguised as sales using accounting loopholes.
Satyam Scandal (2009):
Satyam Computer Services was an
Indian IT services and back-office accounting firm based out of Hyderabad,
India. In 2009, it was discovered that the company had inflated revenue by $1.5
billion, marking one of the largest accounting scandals.
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