Top management took advantage of this disorganization to conceal its fraudulent activities. The company’s accounting system was a disorganized collection of non-integrated systems, which resulted from a series of corporate acquisitions. Total take: $7 billion THE MISSING CONTROLS Documentation procedures. Capitalization delayed expense recognition to future periods and thus boosted current-period profits. The line costs, which were rental fees paid to other phone companies to use their phone lines, had always been properly expensed in previous years. One of these frauds involved treating $7 billion of line costs as capital expenditures. Com’s accountants to engage in a number of fraudulent activities to make net income look better than it really was and thus prop up the stock price. Com’s performance started to flatten out, Bernie coerced World. However, because the acquired companies all had different accounting systems, World. These acquisitions made the company grow quickly, which made the stock price increase dramatically. The company engaged in a series of increasingly large, debt-financed acquisitions of other companies. ANATOMY OF A FRAUD Bernie Ebers was the founder and CEO of the phone company World.
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