Introduction
Currently, many companies experience a number of accounting scandals that negatively affect the progress of the companies’ business activities. Indeed, some of the scandals have brought down big corporations to their knees in the recent past. Accounting authorities are often tasked with the responsibility of handling the company’s financial records and ensuring that the accounting figures are always updated in accordance with the Generally Accepted Accounting Principles (Markham 44). However, some employees and managers may take advantage of the prevailing loopholes in the accounting systems to fleece funds from the companies they work with. This paper is devoted to the review of the major corporate accounting scandals that have affected the accounting systems in leading corporations.
First response
The Baptist Foundation of Arizona – A Case of Proper Fund
According to discussion one, a minister’s son goes off radar and embezzles funds belonging to The Baptist Foundation of Arizona. Furthermore, the funds are swindles in collaboration with other members of staff within the company’s premises. The scandal brought money to the company at that time but put its investors at higher risks. Having the investors in oblivion, the foundations’ deceitful plans involved a number of counterfeit for-profit companies that the company leaders created. The members of the accounting committee and their cohorts took advantage of the loopholes in the company and fraudulently took the company to its knees. These fake companies received the investments and used the funds in assuming the roles of buyers in BFA’s real estate buying and selling deals.
Notably, the insufficient dealings that have taken place in the company enabled the shams to transfer of the entire savings into the reserves of Baptist Foundation of Arizona disguising the money as sincere cash inflow in the church. The scandals and schemes that took place in the company were well orchestrated in a way that they could take down any individual who stood in its path.
In reviewing the incidences that occurred at Baptist Foundation of Arizona, it is evident that the scandals within the accounting system could have brought down the company in case they are not solved in time. It is, therefore, effective to analyze major accounting guidelines that can be used to prevent future scandals within the organization. Besides, the company should employ major principles that guide the accounting system as stipulated by GAAP(Markham 45).
Second response
Bernie Madoff Scandal
In the second discussion, Bernie Madoff initiated one of the biggest schemes and stole more than $60 million from the stakeholders of the company. In addition, there was another scandal that was orchestrated by Richard Scurshy the CEO of HealthSouth who fabricated figures in the accounts in order to increase the company’s total earnings. According to list 25, the scandal enabled the CEO to fraudulently embezzle over $1.4 billion. In order to cover his tracks the CEO recorded the amount as the company’s total earnings between 1996 and 2003(“25 Biggest Corporate Scandals Ever.”). Ironically, Health South was one of the places that were given the responsibility of taking care of other people’s lives.
In combating the scandals, patients who were already admitted at the hospital could have sued the company in order to stop such incidences from happening in future. Notably, the CEO was supposed to be held responsible for any damages that occurred to patients during his time as the head of the hospital. Interestingly, the corporate scandal in the hospital enabled the CEO to swindle so much within short time span.
Works Cited
Markham, Jerry W. A Financial History of Modern U.S. Corporate Scandals: From Enron to Reform. Armonk: M.E. Sharpe, 2006. Print.
“25 Biggest Corporate Scandals Ever.” List25. N.p., n.d. Web.