Autonomy Corporation Accounting Scandal
What fraud or other financial malfeasance took place?

Hewlett Packard on November 20, 2012 delivered a statement against Autonomy's unmentioned members of the previous management team accusing them of final impropriety. The shocking thing about the turn of events was that HP had accused the un-specified members of huge allegations and that too without any contact or notice to the Autonomy's CEO (Autonomy Accounts, 2012). However, all the allegations were denied by the Autonomy who during the past as the company of public had handled its finances according to the applied practices and regulations. These practices were also checked on by Deloitte LLC which is an independent auditor and it confirms the applicable procedures which were also commanded by the IFS used in the United Kingdom (Autonomy Accounts, 2012).

A lot of spectators were shocked by the claims made by HP regarding the allegations which make up to 5…...

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References

Autonomy Accounts. (2012). Mike Lynch publishes an open letter to Hewlett-Packard. http://autonomyaccounts.org/an-open-letter-to-hp/

BBC. (2011). Hewlett-Packard completes Autonomy buyout.  http://www.bbc.co.uk/news/business-15161453 

De La Merced, M. (2012). Autonomy's Ex-Chief: H.P.'s Claims 'Completely and Utterly Wrong'.  http://dealbook.nytimes.com/2012/11/20/autonomys-ex-chief-h-p-s-claims-completely-and-utterly-wrong/ 

Hardy, H. And De La Merced, M. (2012). Hewlett's Loss: A Folly Unfolds, by the Numbers.  http://dealbook.nytimes.com/2012/11/20/h-p-takes-big-hit-on-accounting-improprieties-at-autonomy/?_php=true&_type=blogs&_r=0

Olympus Accounting Scandal
In economic boom that occurred in 1980s, a lot of Japanese enterprises struggled to sustain sales in international market because of the strong yen. Akin to several other businesses, Olympus offset its decreasing sales by participating in offshoots and non-core businesses, promoted by low rates of interest and easy credit access. After the Japanese bubble burst, the company sustained huge losses on its various investments, amounting to around $1.3 billion.

In an attempt to avoid revealing this loss within the enterprises' merged financial statements, Olympus traded the loss-making assets through specific modes that were never included in its books. The practice was relatively common in Japan in 1990s and in early 2000s; thus, to oblige with shifts in Japanese accounting guidelines' requirements in 2008, Olympus' senior management try to protect its tracks (oss, 2012).

In order to avoid revealing the hidden losses before the onset of new accounting guidelines,…...

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References

Aronson, B. E. (2013). The Olympus Scandal and Corporate Governance Reform: Can Japan Find a Middle Ground between the Board Monitoring Model and Management Model? ZeitschriftfurJapanischesRecht, 18(35), 85-106.

Cohn, M. (2012). Olympus Whistle-blower to Be Honoured. Retrieved 13 April 2016 from  http://www.accountingtoday.com/blogs/debits-credits/Olympus-Whistleblower-Honored-61913-1.html 

Fraud in Financial Statements: Olympus (n.d.). Retrieved 13 April 2016 from http://clubs.cob.calpoly.edu/~cmiller/552/cases%20without%20teaching%20notes/Olympus%20-arline.pdf

Greenfeld, K. T. (2012). The Story Behind the Olympus Scandal. Retrieved May 04, 2016, from  http://www.bloomberg.com/news/articles/2012-02-16/the-story-behind-the-olympus-scandal

Toshiba’s Accounting Scandal: Business Ethics and the Media Along with Sony, the Toshiba Corporation is one of the most legendary and famous Japanese technology companies in the world. According to the “History of Innovation” section of its official corporate website, Toshiba boasts a long, proud 135-year technological history. In the past thirty years, the company has given birth to the first laptop computer for the average consumer, the first wireless laptop, and the world’s thinnest widescreen laptop (“History of Innovation,” 2017). It has also boasted groundbreaking innovations in DVDs, televisions, and other consumer products. Yet while Toshiba has been trusted for many years to produce high-quality products, it has also boasted a highly insular culture of loyalty that has fostered a breeding ground of corruption (“History of Innovation,” 2017). Toshiba was recently beset by a serious accounting scandal that tarnished the reputation of the corporate giant. In the wake of the…...

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References

History of innovation. (2017). Toshiba. Retrieved from:

 

McLaverty, C. & McKee, (2016). What you can do to improve ethics at your company. Harvard

Business Review. Retrieved from: https://hbr.org/2016/12/what-you-can-do-to-improve- ethics-at-your-company

Sargeant, N. (2017). What is the difference between principles-based and rules-based

accounting? Investopedia. Retrieved from:  http://www.investopedia.com/ask/answers/06/rulesandpriciplesbasedaccounting.asp 

Singh, M. (2015). Toshiba accounting scandal: A corporate culture problem. CFA Institute.

Retrieved from:  https://blogs.cfainstitute.org/marketintegrity/2015/10/30/toshiba - accounting-scandal-a- corporate-culture-problem/http://us.toshiba.com/company/history-of-innovation/ 

Accounting Scandals
$2.65 billion. That is the amount the investment Citigroup agreed, less than a year ago, to pay to investors who had bought stock and bonds in the telecommunications giant orldCom before its bankruptcy filing two years ago. If the adage that 'crime does not pay' is not always true, it is certainly valid when estimating the tremendous cost the orldCom and Enron investing and accounting scandals have cost employees, investors, shareholder, and ordinary consumers. (Morgenstern, 2004)

The Citigroup settlement was the second-largest amount ever paid to settle a securities class action. It was the largest settlement ever granted by a bank, brokerage firm or auditor to settle a fraud case brought about by investors alleging that they had been deliberately mislead to buy securities issued by an outside corporation. Citigroup denied that it violated any laws when encouraging investment in orldCom. Rather, it stated that it agreed to the arrangement…...

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Works Cited

BBC. (27 Jan 2005) "Enron bosses agree $168m payout." BBC News. Business Report. Retrieved 21 Feb at 2005  http://news.bbc.co.uk/1/hi/business/4159343.stm 

Citigroup Press Release. (10 May 2004) "Citigroup Reaches Settlement on WorldCom Class Action Litigation for $1.64 Billion After-Tax." Citigroup Official Website. Press Releases. Retrieved 21 Feb at http://www.citigroup.com/citigroup/press/2004/040510a.htm

Morgenstern, Gretchen. (11 May 2004) "Citigroup agrees to a settlement over WorldCom." The New York Times. Business Section. Retrieved 21 Feb at   en=eceb7f0816389d10& ex=1399608000& adxnnl=1& partner=USERLAND& adxnnlx=1108990924-mADzfFbri1DqH7r5qzkmNwhttp://www.nytimes.com/2004/05/11/business/11CITI.html?ei=5007& ;

O'Brien, Tim. (11 May 2004) "Citigroup Assesses a risk and decides to settle." The New York Times. Retrieved 21 Feb at   en=1da7c18b036a75fb& ei=5070http://www.nytimes.com/2004/05/11/business/11place.html?ex=1109134800& ;

Professional Profile of the Defense Finance and Accounting Service (DFAS):
Chaos

What is the Defense Finance and Accounting Service?

Ensuring that the men and women who work for the United States military receive their salaries promptly is critical. The Defense Finance and Accounting Service (DFAS) serves this vital function. The DFAS was created in 1991 by the Secretary of Defense, "to standardize, consolidate, and improve accounting and financial functions throughout the Dod. The intent was to reduce the cost of the Department's finance and accounting operations while strengthening its financial management" ("Agency overview," 2016). Today, the organization pays all "military and civilian personnel, retirees and annuitants, as well as major Dod contractors and vendors" as well as is responsible for accounting and financial record-keeping for the Dod ("Agency overview," 2016). The agency was formed to consolidate different administrative functions but has been the target of a great deal of criticism because its presence…...

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References

Agency overview. (2016). DFAS. Retrieved from:

 http://www.dfas.mil/pressroom/aboutdfas.html 

Crawford, J. (2016). Audit reveals Army's trillion-dollar accounting gaffes. CNN.

Retrieved from:

In this case, it was a $4.9 billion bank account. However, credit would have been granted against an asset like that. Finding such an account did not exist, banks would have wanted their money back, and Parmalat would not have had it. This would be grounds to take the company into insolvency, especially if somebody at Parmalat was counting on that account to pay off its debts.
4. These fraudulent activities, as noted, would have boosted the accounts receivable at Parmalat, and could potentially have reduced the inventories as well. The effect on the balance sheet, if the inventories were not affected, would have been to boost the a/R and therefore the current assets. As a result, the quick ratio would have improved, on the basis of an inflated accounts receivable.

5. Citicorp was a victim here. There are some controls that can be done to ensure that the financial statements…...

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Works Cited:

No author. (2004). File suggests double-billing by Parmalat. New York Times. Retrieved April 6, 2012 from  http://www.nytimes.com/2004/02/02/world/files-suggest-double-billing-by-parmalat.html

The CEO of Martha Stewart Living Omnimedia, Inc., Sharon L. Patrick, issued a press release in October: "Despite the losses in the quarter, we continue to benefit from strong consumer support for our products, which offer that unique blend of 'Martha Stewart' brand attributes - inspirational 'how-to' ideas translated into products that stand for quality, style, usefulness and affordability," Patrick reported.

During the 3rd Quarter of 2004, Stewart's company purchased "Body and Soul" magazine, and Patrick also announced that Stewart will launch a new television show; and Mark Burnett Productions will "develop and produce a primetime network television series" set to launch in the fall of 2005 (Burnett is the producer of "Survivor").

Current assets for Martha Stewart Living Omnimedia, Inc., as of Sept. 30, 2004, were $179,298. Current Liabilities for the same period, $61,815. That is a plus $117,483.

For the year ending 2003, "net cash provided by (used in) operating activities"…...

Another challenge facing the industry today is the important legal issues that surround the Sarbanes-Oxley Act (Koehn & Del Vecchio, 2004). One of these is the fact that the process of due diligence practiced by many companies is now taking much longer (Koehn & Del Vecchio, 2004). There is a higher degree of caution than was previously utilized and because of this many companies are discovering information that would have gone unnoticed before the Act was passed. This is, however, not the only legal issue that the Sarbanes-Oxley Act has caused (Koehn & Del Vecchio, 2004). Another concern is that accountants and attorneys could now be required to report the known wrongdoings of corporations that they have business with to authorities.

Since lawyers are now required to disclose these types of issues, the attorney-client privilege has been compromised by this Act (Koehn & Del Vecchio, 2004). However, the Act was necessary…...

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Bibliography

Bradley, C.F. (1994). An empirical investigation of factors affecting corporate tax compliance behavior. Ph.D. dissertation, the University of Alabama.

Koehn, J.L. & Del Vecchio, S.C. (2004). Ripple effects of the Sarbanes-Oxley Act. The CPA Journal: 36-40.

Roper, J.C. (2006). Expert backs Enron's accounting practices. Houston Chronicle. Retrieved from  http://www.chron.com/disp/story.mpl/front/3839212.html .

This leads to the inability to compare financial statements reliably with each other (Seay & Ford, 2010). A second concern is that the income statement will reflect increased volatility due to fair market writeups or writedowns. The third concern is the inconsistency in valuing some assets and liabilities at the current exit price. The fourth concern is whether price reflects the intrinsic value of the asset. It is suspected that price and value will differ, particularly in a downward trending market (Seay & Ford, 2010).
These concerns will affect the acceptance of fair value accounting and its ability to restore trust in the transparency and accuracy of accounting statements. According to Seay & Ford, many blamed fair value accounting for the collapse of the banking industry. However, they remind readers that the accountant only reports the information and that they were not to blame in the banking industry collapse.

As one…...

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References

Bedard, J. & Gendron, Y. (2010). Can audit committees deliver? CA Magazine; Sep 2010; 143 (7). 50-53.

Gates, S., Lowe, D. & Reckers, P. (2007). Restoring public confidence in capital markets through auditor rotation. Managerial Auditing Journal. 22 (1): 5-17.

Seay, S. & Ford, W. (2010). Fair Presentation -- an Ethical Perspective on Fair Value Accounting Pursuant to the SEC Study on Mark-to-Market Accounting. Journal of Legal, Ethical and Regulatory Issues, 13 (1): 53-66.

Thomason, M. (2009). Auditing the PCOAB: A Test to the Accountability of the Uniquely Structured Regulator of Accountants. Vanderbilt Law Review. 62 (6): 1954-1989.

Ethical Violations - South African Audit ScandalIntroductionBrowning, Levin, & Wolod is interested in expanding accounting and auditing services to Luxembourg, Malta, Monaco, and south Africa. The introduction of international operations into the organization creates new opportunities that can be leveraged by the organization to generate revenue and new risks that can be mitigated by training the recruits accordingly (Minh Duc et al., 2019). The KPMG case is recognized internationally for the egregious violation of accounting and auditing professional codes of conduct. The training process of the auditors and accountants who will be involved in the international operations will focus on the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct, South African Institute of Chartered Accountants (SAICA) Code of Professional Conduct, and International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants (Schilder, 2017). The KPMG SA was selected since it encompasses comprehensive auditing and accounting professional…...

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ReferencesAbdullah, Z., Almsafir, M., & Al-Smadi, A. (2015). Transparency and Reliability in Financial Statement: Do They Exist? Evidence from Malaysia. Open Journal Of Accounting, 04(04), 29-43.   I. (2018). The audit profession needs a New Dawn. Daily Maverick. Retrieved 25 October 2021, from  https://www.dailymaverick.co.za/opinionista/2018-03-19-audit-profession-needs-a-new-dawn/ .BBC News. (2017). B.T. Italy scandal prompts auditing probe. BBC News. Retrieved 26 October 2021, from  https://www.bbc.com/news/business-40441128 .Dimitriu, R. (2017). Auditor Independence: Lessons from KPMG South Africa & Other Scandals. sustainalytics.com. Retrieved 25 October 2021, from  https://www.sustainalytics.com/esg-research/resource/investors-esg-blog/auditor-independence-lessons-from-kpmg-south-africa-other-scandals .Erah, D., Izedonmi, F., & Onwuchekwa, J. (2012). Mandatory Audit Rotation and Audit Independence: Survey of Southern Nigeria. Research Journal Of Finance And Accounting, 3(7). Retrieved 25 October 2021, from  https://core.ac.uk/download/pdf/234629325.pdf .Fildes, N. (2017). B.T. warns on profits after Italian accounting scandal worsens. Ft.com. Retrieved 25 October 2021, from  https://www.ft.com/content/f1027f38-e207-11e6-9645-c9357a75844a .Henderson, R. (2021). Bloomberg - Are you a robot?. Bloomberg.com. Retrieved 25 October 2021, from  https://www.bloomberg.com/news/articles/2021-02-15/kpmg-to-end-consulting-services-for-south-african-listed-clients .Holtzblatt, M., Foltin, C., & Tschakert, N. (2020). Learning from Ethical Violations in Public Accounting: A South African Audit Scandal and a Firm’s Transformation. Issues In Accounting Education, 35(2), 37-63. https://doi.org/10.2308/issues-19-062KMPG. (2017). KPMG opposes Mandatory Audit Firm rotation (MAFR). KPMG. Retrieved 25 October 2021, from https://home.kpmg/za/en/home/insights/2017/01/kpmg-opposes-mandatory-audit-firm-rotation.html.KPMG report signals firm’s renewal. KPMG. (2019). Retrieved 25 October 2021, from https://home.kpmg/za/en/home/media/press-releases/2019/03/kpmg-report-signals-firm-s-renewal.html.Minh Duc, L., Thi Hoang Yen, N., Hoang Ngoc Thuy, V., Hoang Tien, N., & Hung Anh, D. (2019). Enhancing auditors’ independence in auditing enterprises in Vietnam. Cogent Economics & Finance, 7(1), 1602240. https://doi.org/10.1080/23322039.2019.1602240Pang, J. Acceptance and Continuance Of Client Relationships And Specific Engagements. Embracing Quality For Sustainability. Retrieved 25 October 2021, from https://isca.org.sg/media/775266/elements-of-ssqc-1_acceptance-and-continuance-of-client-relationships-and-specific-engagements.pdf.Rapoport, M. (2018). KPMG Acts Globally but Keeps Scandals Local. WSJ. Retrieved 25 October 2021, from https://www.wsj.com/articles/kpmg-acts-globally-but-keeps-scandals-local-1520418601.Schilder, A. (2017). Professional Skepticism in an Audit of Financial Statements [Ebook]. Retrieved 26 October 2021, from  https://www.ifac.org/system/files/publications/files/IAASB%20Professional%20Skepticism%20QandA-final.pdf .Shawver, T. (2020). A practitioners’ guide to the new AICPA Code of Professional Conduct. The Journal Of Finance And Accountancy, 20. Retrieved 24 October 2021, from  https://www.aabri.com/manuscripts/162407.pdf .Triodos Investment Management. (2020). Why Integrated Reporting (I.R.) is a powerful tool towards sustainability. Triodos-im.com. Retrieved 26 October 2021, from  https://www.triodos-im.com/articles/2018/integrated-reporting---a-powerful-tool-towards-sustainability .Wolfe, J., & Stanley Sterna, J. (2020). Managing the Risks of Client Acceptance and Continuance - The CPA Journal. The CPA Journal. Retrieved 25 October 2021, from  https://www.cpajournal.com/2020/02/12/managing-the-risks-of-client-acceptance-and-continuance/ .Writer, S. (2019). KPMG announces new leadership team for South Africa. Businesstech.co.za. Retrieved 25 October 2021, from https://businesstech.co.za/news/finance/203860/kpmg-announces-new-leadership-team-for-south-africa/. https://doi.org/10.4236/ojacct.2015.44004 Abedian,

WorldCom
Prior to the corporate financial scandal, WorldCom was one of the largest long distance telephone companies (euters, 2003). Initially headquartered in Mississippi it later moved to Virginia. The company grew fast by acquiring other companies such as MCI Communications in 1998 and UUNET technology in 1996. Other companies acquired included, Metromedia in 1992, esurgens Communications Group in 1993. In the course of this acquisition spree, WorldCom undertook two complex takeovers. The first was the 1998 acquisition of CompuServe from H& Block where it retained the network division, sold off the online service to American Online (AOL) and the second, the acquisition of Digex in 2001, and disposed of all Digex assets to Allegiance Telecom (Kaplan & Kiron, 2004). With these acquisitions, it gained a favorable reputation in the market as a company with a solid foundation.

Facts of the WorldCom Case

The WorldCom fraud case is one of the largest corporate…...

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References

Kaplan, R.S., & Kiron, D. (2004). Accounting Fraud at WorldCom. HBS Premier Case Collection .

Reuters. (2003, April 14). WorldCom to emerge from collapse. Retrieved from www.cnn.com: http://edition.cnn.com/2003/Business/04/14/worldcom/

Ryerson, F. (2009). Improper Capitalization and The Management of Earnings. Las Vegas: Macon State College.

The Securities and Exchange Commission, 02 Civ. 3288 (United States District Court For the Southern District of New York June 26, 2002).

Accounting Profession: New Scrutiny and esponsibilities
While many people treat the accounting profession as something which lacks glamour and prestige, ordinary civilians often don't realize how crucial the accounting profession is to the world at large. The accounting departments in major firms are often what provides a foundation for most companies to be able to do what they do and accomplish tasks as needed. Accountants are the ones who are able to keep track of all the finances that are going out vs. what is coming in. Given the "new normal" in the world of corporate finance in light of the more recent corporate scandals, the work that accountants do have a greater level of importance. Accountants are now under greater scrutiny and have greater levels of responsibility: the accounting departments in major firms are now seen as ethical watch-dogs.

The skills and knowledge required in being an accountant are extensive.…...

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References

Balassone, J. (2014). Ethical Meltdown: Red Flags for Directors. Retrieved from scu.edu:

 http://www.scu.edu/ethics/practicing/focusareas/business/red-flags.html 

Einhorn, W.M. (2003). Ethical Accounting Practices and the Pressures on CPAs.

Retrieved from nysscpa.com:

Arthur Anderson: Questionable Accounting Parctices
Arthur Anderson: Questionable Accounting Practices

Arthur Andersen LLP was founded in 1913, and for over 90 years, the company would have become one of the "Big Five" largest accounting and auditing firms in the United States with the same standard comparable to PricewaterhouseCoopers, Deloitte & Touche, KPMG and Ernst & Young. In the 80s, Arthur Anderson name was synonymous with integrity, trust, and ethics. Such values are critical to the success of firms charged with auditing and firms confirming a company's financial statement, whose accuracy of a company's financial statements generally influence investor's investment decision. (Ferrell, Linda, 2012).

In the 1990s, Arthur Anderson became one of the fastest growing accounting and auditing firms in the United States with huge financial success during the period. However, starting from 2001, the company faced several lawsuits for accounting irregularities. In May 2001, "the company paid $110 million to settle claims brought…...

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References

Ferrell, O.C. Linda, J.F. (2012). Business Ethics: Ethical Decision Making and Cases: 2009 Update. Cengage Learning

Fraedrich, J. Ferrell, O.C. Ferrell, L.(2011). Ethical Decision Making for Business. Cengage Learning.

McGlynn, M (2010). Arthur Andersen Case Studies in Business Ethics. Carnegie Mellon Temper School of Business.

28)
This quotation shows how arbitrary MTM can be. Simply by terming Enron's cash shortage a sa minority interest as opposed to the proper term for it, debt, Enron was able to manipulate MTM to prevent such a sizeable loss from appearing on its balance sheet. Moreover, MTM's role in this transaction allowed Enron to repair its problem of a cash flow shortage since it credited $500 million via its sale of Treasury securities. The relative short duration in which Enron was able to take out a loan and repay it indicates how effective MTM was in providing Enron a favorable balance sheet, and in singled-handedly dancing around the reality of its shortages. Additionally, it also kept others (shareholders, stakeholders, not to mention its hard working employees) to know how tenuous an economic position the company was actually in.

In discussing Enron's MTM approach to accounting and the considerable role it…...

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References

Batson, N. (2003). "Second interim report of Neal Batson, court appointed examiner." Enron Corp et al., v. Debtors.

Monks, R.G., Minnow, N. (2008). Corporate Governance. New Jersey: Blackwell Publishers. Retrieved from http://www.ragm.com/enron/accounting.html

Valdmanis, T. (2008). "Senate report blasts SEC's Enron oversight." USA Today. Retrieved from  http://usatoday30.usatoday.com/money/industries/banking/2002-10-06-sec_x.htm

Information System holds in Accounting Industry's future?
Looking through the glass and estimating what the future holds for any individual or profession is always a difficult exercise as the trends in any business or profession may change and so the path of development. It is better to look at the experience of some companies whose systems have changed over the past few years and thus try to estimate what is likely to happen.

There are many changes that have come to the world through the development of Information Technology and Computers. All the changes have come over a relatively short period of twenty years, and in many cases both industry and concerned humans are yet to adjust to the changes. There are many changes which have come in the accounting industry also, and those changes give an idea of what is likely to happen in the future.

The organization where the changes…...

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REFERENCES

Anders, Susan B. (February, 2005) "Website of the Month: Legalbitstream" The CPA Journal.

Retrieved from   Accessed on 12 July, 2005http://www.nysscpa.org/cpajournal/2005/205/essentials/p70.htm 

Anders, Susan B. (July, 2005) "Website of the Month: Kaplan CPA Review" The CPA Journal.

Retrieved from   Accessed on 12 July, 2005http://www.nysscpa.org/cpajournal/2005/705/essentials/p70.htm 

One possible essay subject related to case studies for SEC (Securities and Exchange Commission) and ACC (Accounting) could be the recent scandal involving the German fintech company Wirecard. Wirecard was once touted as one of Germany's biggest success stories, but it collapsed in 2020 after it emerged that the company had been involved in a massive accounting fraud.

The scandal raised serious questions about the effectiveness of regulatory oversight by the SEC, as well as the role of auditing firms in detecting and preventing financial fraud. It also highlighted the challenges of regulating the rapidly-evolving fintech industry, which often operates in....