"Accounting Theory" is a course of MBA in Jagannath University. This course is very important understanding all the aspects of accounting in business atmosphere.
The WorldCom scandal was a major accounting scandal that came to light in the summer of 2002 at WorldCom, the USA's second-largest long-distance telephone company at the time.
This is a quick analysis of how WorldCom fraud was discovered and what exactly did WorldCom do to keep the E/R ratio in tact. E/R ratio was the major parameter of performance in the telecom business which the WorldCom was in. It used two major accounting concepts in a wrong manner to fudge the numbers.
6 White-Collar Crime and the Business Community CRIME AND C.docxevonnehoggarth79783
6 White-Collar Crime and the Business Community
CRIME AND CRIMINAL PROCEDURE
DISTINGUISHING FEATURES OF WHITE-COLLAR CRIME
COMMON WHITE-COLLAR CRIMES
PREVENTION OF WHITE-COLLAR CRIME
FEDERAL LAWS USED IN THE FIGHT AGAINST WHITE-COLLAR CRIME
STATE LAWS USED IN THE FIGHT AGAINST WHITE-COLLAR CRIME
GLOBAL DIMENSIONS OF WHITE-COLLAR CRIME
A midst the turmoil and fallout of the Enron scandal that led to the company’s declaration of bankruptcy, a number of former Enron officials faced charges for various offenses. One such official was former CEO Jeffrey Skilling, who was ultimately found guilty of 19 fraud related charges, including conspiracy, insider trading, securities fraud, and making false statements to auditors. As punishment for his misdeeds, the 52-year-old Skilling was sentenced in 2006 to 24 years and 4 months in a federal prison. In addition, he was fined $45 million, which was to be put into a fund to benefit those who had been harmed by Enron’s collapse. While servining his sentence in 2010, he won a minor victory when the U.S. Supreme Court found that instructions to the jury with respect to one of the charges were inaccurate, and threw out the conviction on that charge. The case was then sent back to the trial court judge to determine whether the inaccurate instructions regarding the one charge tainted the convictions on the other charges. In 2013, the case was finally resolved as he was resentenced to 14 years in a federal prison as part of a court ordered reduction and a separate plea agreement with the prosecution. Unfortunately, this story is just one of many recent large and complex white-collar crime scandals. During 2009, Internet crime resulted in losses in the United States of $559.7 million, more than two times as much as in 2008.1 At the end of 2008, the FBI was investigating 545 corporate fraud cases each of which involved investor losses that exceeded $1 billion.2
1’Internet Crime Complaint Center, IC3 Annual Internet Crime Report 2009; retrieved May 10, 2010, from National White Collar Crime Center, http://www.nw3c.org/research/site_files.cfm?fileid=dl991bea-8a22-4e54-82f5-678d4d83581a&mode=r.
2Federal Bureau of Investigation, Financial Crimes Report to the Public Fiscal Year 2008; retrieved May 10, 2010, from http://www.fbi.gov/publications/financial/fcs_report2008/financial_crime2008.htm#health
135 136
The Coalition Against Insurance Fraud reports that insurance fraud costs Americans more than $80 billion per year.3
White-collar crimes—crimes committed in a commercial context—occur every day. Collectively, these crimes often result in millions of dollars of damages. In recent years, as corporate crimes such as the ones detailed in Exhibit 6-1 become more publicized, people’s attitudes toward corporations and white-collar crime are being affected.
3Coalition Against Insurance Fraud, “Consumer Information,” http://www.insurancefraud.org/fraud_backgrounder.htm, May 10, 2010
EXHIBIT 6-.
The WorldCom scandal was a major accounting scandal that came to light in the summer of 2002 at WorldCom, the USA's second-largest long-distance telephone company at the time.
This is a quick analysis of how WorldCom fraud was discovered and what exactly did WorldCom do to keep the E/R ratio in tact. E/R ratio was the major parameter of performance in the telecom business which the WorldCom was in. It used two major accounting concepts in a wrong manner to fudge the numbers.
6 White-Collar Crime and the Business Community CRIME AND C.docxevonnehoggarth79783
6 White-Collar Crime and the Business Community
CRIME AND CRIMINAL PROCEDURE
DISTINGUISHING FEATURES OF WHITE-COLLAR CRIME
COMMON WHITE-COLLAR CRIMES
PREVENTION OF WHITE-COLLAR CRIME
FEDERAL LAWS USED IN THE FIGHT AGAINST WHITE-COLLAR CRIME
STATE LAWS USED IN THE FIGHT AGAINST WHITE-COLLAR CRIME
GLOBAL DIMENSIONS OF WHITE-COLLAR CRIME
A midst the turmoil and fallout of the Enron scandal that led to the company’s declaration of bankruptcy, a number of former Enron officials faced charges for various offenses. One such official was former CEO Jeffrey Skilling, who was ultimately found guilty of 19 fraud related charges, including conspiracy, insider trading, securities fraud, and making false statements to auditors. As punishment for his misdeeds, the 52-year-old Skilling was sentenced in 2006 to 24 years and 4 months in a federal prison. In addition, he was fined $45 million, which was to be put into a fund to benefit those who had been harmed by Enron’s collapse. While servining his sentence in 2010, he won a minor victory when the U.S. Supreme Court found that instructions to the jury with respect to one of the charges were inaccurate, and threw out the conviction on that charge. The case was then sent back to the trial court judge to determine whether the inaccurate instructions regarding the one charge tainted the convictions on the other charges. In 2013, the case was finally resolved as he was resentenced to 14 years in a federal prison as part of a court ordered reduction and a separate plea agreement with the prosecution. Unfortunately, this story is just one of many recent large and complex white-collar crime scandals. During 2009, Internet crime resulted in losses in the United States of $559.7 million, more than two times as much as in 2008.1 At the end of 2008, the FBI was investigating 545 corporate fraud cases each of which involved investor losses that exceeded $1 billion.2
1’Internet Crime Complaint Center, IC3 Annual Internet Crime Report 2009; retrieved May 10, 2010, from National White Collar Crime Center, http://www.nw3c.org/research/site_files.cfm?fileid=dl991bea-8a22-4e54-82f5-678d4d83581a&mode=r.
2Federal Bureau of Investigation, Financial Crimes Report to the Public Fiscal Year 2008; retrieved May 10, 2010, from http://www.fbi.gov/publications/financial/fcs_report2008/financial_crime2008.htm#health
135 136
The Coalition Against Insurance Fraud reports that insurance fraud costs Americans more than $80 billion per year.3
White-collar crimes—crimes committed in a commercial context—occur every day. Collectively, these crimes often result in millions of dollars of damages. In recent years, as corporate crimes such as the ones detailed in Exhibit 6-1 become more publicized, people’s attitudes toward corporations and white-collar crime are being affected.
3Coalition Against Insurance Fraud, “Consumer Information,” http://www.insurancefraud.org/fraud_backgrounder.htm, May 10, 2010
EXHIBIT 6-.
Chapter Six White-Collar Crime and the Business CommunityAmids.docxspoonerneddy
Chapter Six White-Collar Crime and the Business Community
Amidst the turmoil and fallout of the Enron scandal that led to the company’s declaration of bankruptcy, a number of former Enron officials faced charges for various offenses. One such official was former CEO Jeffrey Skilling, who was ultimately found guilty of 19 fraud related charges, including conspiracy, insider trading, securities fraud, and making false statements to auditors. As punishment for his misdeeds, the 52-year-old Skilling was sentenced in 2006 to 24 years and 4 months in a federal prison. In addition, he was fined $45 million, which was to be put into a fund to benefit those who had been harmed by Enron’s collapse. While serving his sentence in 2010, he won a minor victory when the U.S. Supreme Court found that instructions to the jury with respect to one of the charges were inaccurate, and threw out the conviction on that charge. The case was then sent back to the trial court judge to determine whether the inaccurate instructions regarding the one charge tainted the convictions on the other charges. In 2013, the case was finally resolved as he was resentenced to 14 years in a federal prison as part of a court ordered reduction and a separate plea agreement with the prosecution. Unfortunately, this story is just one of many recent large and complex white-collar crime scandals. During 2009, Internet crime resulted in losses in the United States of $559.7 million, more than two times as much as in 2008.1 At the end of 2008, the FBI was investigating 545 corporate fraud cases each of which involved investor losses that exceeded $1 billion.2 The Coalition Against Insurance Fraud reports that insurance fraud costs Americans more than $80 billion per year.3
1 Internet Crime Complaint Center, IC3 Annual Internet Crime Report 2009; retrieved May 10, 2010, from National White Collar Crime Center, http://www.nw3c.org/research/site_files .cfm?fileid=d1991bea-8a22-4e54-82f5-678d4d83581a&mode=r.
2 Federal Bureau of Investigation, Financial Crimes Report to the Public Fiscal Year 2008; retrieved May 10, 2010, from http://www.fbi.gov/publications/financial/fcs_report2008/financial_crime_2008.htm#health.
3 Coalition Against Insurance Fraud, “Consumer Information.” Accessed May 10, 2010 at http://www .insurancefraud.org/fraud_backgrounder.htm.
White-collar crimes—crimes committed in a commercial context—occur every day. Collectively, these crimes often result in millions of dollars of damages. In recent years, as corporate crimes such as the ones detailed in Exhibit 6-1
Allen Stanford. Sentence: 110 years
Allen Stanford, 63, was a Texan financier accused of running a $7 billion Ponzi scheme. He had investors invest billions of dollars into his bank, and then spent the money on private jets, yachts, and acres of undeveloped Antiguan land among other expenditures. In December 2008, Stanford International Bank had $88 million in cash, but it fudged its numbers to say it had $1 billion in.
Chapter Six White-Collar Crime and the Business CommunityAmids.docxmccormicknadine86
Chapter Six White-Collar Crime and the Business Community
Amidst the turmoil and fallout of the Enron scandal that led to the company’s declaration of bankruptcy, a number of former Enron officials faced charges for various offenses. One such official was former CEO Jeffrey Skilling, who was ultimately found guilty of 19 fraud related charges, including conspiracy, insider trading, securities fraud, and making false statements to auditors. As punishment for his misdeeds, the 52-year-old Skilling was sentenced in 2006 to 24 years and 4 months in a federal prison. In addition, he was fined $45 million, which was to be put into a fund to benefit those who had been harmed by Enron’s collapse. While serving his sentence in 2010, he won a minor victory when the U.S. Supreme Court found that instructions to the jury with respect to one of the charges were inaccurate, and threw out the conviction on that charge. The case was then sent back to the trial court judge to determine whether the inaccurate instructions regarding the one charge tainted the convictions on the other charges. In 2013, the case was finally resolved as he was resentenced to 14 years in a federal prison as part of a court ordered reduction and a separate plea agreement with the prosecution. Unfortunately, this story is just one of many recent large and complex white-collar crime scandals. During 2009, Internet crime resulted in losses in the United States of $559.7 million, more than two times as much as in 2008.1 At the end of 2008, the FBI was investigating 545 corporate fraud cases each of which involved investor losses that exceeded $1 billion.2 The Coalition Against Insurance Fraud reports that insurance fraud costs Americans more than $80 billion per year.3
1 Internet Crime Complaint Center, IC3 Annual Internet Crime Report 2009; retrieved May 10, 2010, from National White Collar Crime Center, http://www.nw3c.org/research/site_files .cfm?fileid=d1991bea-8a22-4e54-82f5-678d4d83581a&mode=r.
2 Federal Bureau of Investigation, Financial Crimes Report to the Public Fiscal Year 2008; retrieved May 10, 2010, from http://www.fbi.gov/publications/financial/fcs_report2008/financial_crime_2008.htm#health.
3 Coalition Against Insurance Fraud, “Consumer Information.” Accessed May 10, 2010 at http://www .insurancefraud.org/fraud_backgrounder.htm.
White-collar crimes—crimes committed in a commercial context—occur every day. Collectively, these crimes often result in millions of dollars of damages. In recent years, as corporate crimes such as the ones detailed in Exhibit 6-1
Allen Stanford. Sentence: 110 years
Allen Stanford, 63, was a Texan financier accused of running a $7 billion Ponzi scheme. He had investors invest billions of dollars into his bank, and then spent the money on private jets, yachts, and acres of undeveloped Antiguan land among other expenditures. In December 2008, Stanford International Bank had $88 million in cash, but it fudged its numbers to say it had $1 billion in ...
The Unlucky 13: Lessons Learned from Companies Caught in the ActCase IQ
"The Unlucky 13: Lessons Learned from Companies Caught in the Act" explores corporate misconduct at 13 companies and the lessons we've learned from them. You can download the complete guide at: http://i-sight.com/the-unlucky-13-lessons-learned-from-companies-caught-in-the-act/
Internal Controls – The changing Indian Landscape--By Samit Sarafkirtane&Pandit
Internal controls, consisting of internal policies and procedures, are vital for an organization's efficient functioning, fraud prevention, and compliance with legal requirements. In the current diverse and innovative business landscape, the implementation of robust internal controls is more critical than ever.
Recent scandals, such as a major Indian conglomerate facing allegations of misappropriation, highlight the profound impact of fraud on market stability and business conduct. Historical cases like Enron, WorldCom, and Bernie Madoff underscore the necessity for stringent internal controls, leading to legislative responses like the Sarbanes-Oxley Act in 2002.
In India, a prominent IT company experienced a Rs. 7,000 crore accounting manipulation in 2009, prompting regulatory changes under the Companies Act 2013, focusing on comprehensive fraud risk management with strict penalties for violations.
Corporate fraud, spanning embezzlement, accounting fraud, insider trading, and bribery, inflicts enduring consequences, damaging companies financially, tarnishing brands, and triggering legal and regulatory complications. This not only affects employees, customers, and shareholders but also undermines economic stability by eroding investor trust.
Addressing corporate fraud requires significant investments in prevention and detection systems, establishment of effective governance and compliance frameworks, and fostering a culture of honesty and accountability. Strong internal controls, risk management, and ethical corporate cultures are pivotal in preventing fraud.
This report underscores the importance of global and Indian regulatory changes concerning internal controls, considering the scams witnessed over the past decades. The ongoing tendency of companies to accentuate positives and downplay negatives highlights the necessity for regulations safeguarding retail investors and other stakeholders.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
3. Topics of
presentation
10 major corporate financial scandals.
GAAP vs. IFRS.
Accounting treatment that doesn’t follow GAAP.
Accounting as an Ideology.
Grounded theory.
Theories of regulation.
Life of Max Weber.
Big-bath theory.
Window dressing.
Intellectual Capital Accounting.
Human Resources Accounting.
4. Topics of
presentation
Definition of Justice.
Accounting means Accountability…???
Rules of securities & Exchange Commission regarding
Public Limited Companies’ financial disclosures.
Code of Ethics for ICAB & ICMAB.
Financial Reporting Act-2015 in Bangladesh.
5. 10 major
corporate
financial
scandals
Waste Management Scandal (1998)
Company: Houston-based publicly traded waste management company
What happened: Reported $1.7 billion in fake earnings.
Main players: Founder/CEO/Chairman Dean L. Buntrock and other top
executives; Arthur Andersen Company (auditors)
How they did it: The company allegedly falsely increased the
depreciation time length for their property, plant and equipment on the
balance sheets.
How they got caught: A new CEO and management team went through
the books.
Penalties: Settled a shareholder class-action suit for $457 million. SEC
fined Arthur Andersen $7 million.
Fun fact: After the scandal, new CEO A. Maurice Meyers set up an
anonymous company hotline where employees could report dishonest
or improper behavior.
6. 10 major
corporate
financial
scandals
Enron Scandal (2001)
Company: Houston-based commodities, energy and service
corporation
What happened: Shareholders lost $74 billion, thousands of
employees and investors lost their retirement accounts, and many
employees lost their jobs.
Main players: CEO Jeff Skilling and former CEO Ken Lay.
How they did it: Kept huge debts off balance sheets.
How they got caught: Turned in by internal whistleblower Sherron
Watkins; high stock prices fueled external suspicions.
Penalties: Lay died before serving time; Skilling got 24 years in
prison. The company filed for bankruptcy. Arthur Andersen was
found guilty of fudging Enron's accounts.
Fun fact: Fortune Magazine named Enron "America's Most
Innovative Company" 6 years in a row prior to the scandal.
7. 10 major
corporate
financial
scandals
World Com Scandal (2002)
Company: Telecommunications company; now MCI, Inc.
What happened: Inflated assets by as much as $11 billion, leading to
30,000 lost jobs and $180 billion in losses for investors.
Main player: CEO Bernie Ebbers.
How he did it: Underreported line costs by capitalizing rather than
expensing and inflated revenues with fake accounting entries.
How he got caught: WorldCom's internal auditing department
uncovered $3.8 billion of fraud.
Penalties: CFO was fired, controller resigned, and the company
filed for bankruptcy. Ebbers sentenced to 25 years for fraud,
conspiracy and filing false documents with regulators.
Fun fact: Within weeks of the scandal, Congress passed the
Sarbanes-Oxley Act, introducing the most sweeping set of new
business regulations since the 1930s.
8. 10 major
corporate
financial
scandals
Tyco Scandal (2002)
Company: New Jersey-based blue-chip Swiss security systems.
What happened: CEO and CFO stole $150 million and inflated
company income by $500 million.
Main players: CEO Dennis Kozlowski and former CFO Mark
Swartz.
How they did it: Siphoned money through unapproved loans and
fraudulent stock sales. Money was smuggled out of company
disguised as executive bonuses or benefits.
How they got caught: SEC and Manhattan D.A. investigations
uncovered questionable accounting practices, including large loans
made to Kozlowski that were then forgiven.
Penalties: Kozlowski and Swartz were sentenced to 8-25 years in
prison. A class-action lawsuit forced Tyco to pay $2.92 billion to
investors.
Fun fact: At the height of the scandal Kozlowski threw a $2 million
birthday party for his wife on a Mediterranean island, complete with
a Jimmy Buffet performance.
9. 10 major
corporate
financial
scandals
Health South Scandal (2003)
Company: Largest publicly traded health care company in the U.S.
What happened: Earnings numbers were allegedly inflated $1.4
billion to meet stockholder expectations.
Main player: CEO Richard Scrushy.
How he did it: Allegedly told underlings to make up numbers and
transactions from 1996-2003.
How he got caught: Sold $75 million in stock a day before the
company posted a huge loss, triggering SEC suspicions.
Penalties: Scrushy was acquitted of all 36 counts of accounting
fraud, but convicted of bribing the governor of Alabama, leading to
a 7-year prison sentence.
Fun fact: Scrushy now works as a motivational speaker and
maintains his innocence.
10. 10 major
corporate
financial
scandals
Freddie Mac (2003)
Company: Federally backed mortgage-financing giant.
What happened: $5 billion in earnings were misstated.
Main players: President/COO David Glenn, Chairman/CEO Leland
Brendsel, ex-CFO Vaughn Clarke, former senior VPs Robert Dean
and Nazir Dossani.
How they did it: Intentionally misstated and understated earnings on
the books.
How they got caught: An SEC investigation.
Penalties: $125 million in fines and the firing of Glenn, Clarke and
Brendsel.
Fun fact: 1 year later, the other federally backed mortgage financing
company, Fannie Mae, was caught in an equally stunning
accounting scandal.
11. 10 major
corporate
financial
scandals
American International Group (AIG) Scandal (2005)
Company: Multinational insurance corporation.
What happened: Massive accounting fraud to the tune of $3.9 billion was
alleged, along with bid-rigging and stock price manipulation.
Main player: CEO Hank Greenberg.
How he did it: Allegedly booked loans as revenue, steered clients to insurers
with whom AIG had payoff agreements, and told traders to inflate AIG stock
price.
How he got caught: SEC regulator investigations, possibly tipped off by a
whistleblower.
Penalties: Settled with the SEC for $10 million in 2003 and $1.64 billion in
2006, with a Louisiana pension fund for $115 million, and with 3 Ohio
pension funds for $725 million. Greenberg was fired, but has faced no criminal
charges.
Fun fact: After posting the largest quarterly corporate loss in history in 2008
($61.7 billion) and getting bailed out with taxpayer dollars, AIG execs
rewarded themselves with over $165 million in bonuses.
12. 10 major
corporate
financial
scandals
Lehman Brothers Scandal (2008)
Company: Global financial services firm.
What happened: Hid over $50 billion in loans disguised as
sales.
Main players: Lehman executives and the company's auditors,
Ernst & Young.
How they did it: Allegedly sold toxic assets to Cayman Island
banks with the understanding that they would be bought back
eventually. Created the impression Lehman had $50 billion
more cash and $50 billion less in toxic assets than it really did.
How they got caught: Went bankrupt.
Penalties: Forced into the largest bankruptcy in U.S. history.
SEC didn't prosecute due to lack of evidence.
Fun fact: In 2007 Lehman Brothers was ranked the #1 "Most
Admired Securities Firm" by Fortune Magazine.
13. 10 major
corporate
financial
scandals
Bernie Madoff Scandal (2008)
Company: Bernard L. Madoff Investment Securities LLC was a
Wall Street investment firm founded by Madoff.
What happened: Tricked investors out of $64.8 billion through the
largest Ponzi scheme in history.
Main players: Bernie Madoff, his accountant, David Friehling, and
Frank DiPascalli.
How they did it: Investors were paid returns out of their own money
or that of other investors rather than from profits.
How they got caught: Madoff told his sons about his scheme and
they reported him to the SEC. He was arrested the next day.
Penalties: 150 years in prison for Madoff + $170 billion restitution.
Prison time for Friehling and DiPascalli.
Fun fact: Madoff's fraud was revealed just months after the 2008
U.S. financial collapse
14. 10 major
corporate
financial
scandals
Satyam Scandal (2009)
Company: Indian IT services and back-office accounting firm.
What happened: Falsely boosted revenue by $1.5 billion.
Main player: Founder/Chairman Ramalinga Raju.
How he did it: Falsified revenues, margins and cash balances to the
tune of 50 billion rupees.
How he got caught: Admitted the fraud in a letter to the company's
board of directors.
Penalties: Raju and his brother charged with breach of trust,
conspiracy, cheating and falsification of records. Released after the
Central Bureau of Investigation failed to file charges on time.
Fun fact: In 2011 Ramalinga Raju's wife published a book of his
existentialist, free-verse poetry.
16. Examples
regarding the
conflicts
between
GAAP & IFRS
1. Inventory: Under IFRS , LIFO can’t be used but under
GAAP you have to choose between LIFO and FIFO.
2. Consolidation: IFRS prefers a control model whereas
GAAP prefers a risk and return model.
3. Statement of Income: Extra-ordinary items aren’t
segregated in the income statement but under GAAP it is
shown in the net income.
4. EPS: Under IFRS the calculation of EPS doesn’t average
the individual interim period calculation whereas under
GAAP the computation average the individual interim
period incremental shares.
5. Development cost: Cost can be capitalized under IFRS
but under GAAP it is considered as expense.
17. Accounting
Treatment that
doesn’t follow
GAAP
A non-GAAP financial measure is a numerical measure that
adjusts the most directly comparable measure determination
in accordance with GAAP. Such measures provide
supplemental information regarding a company historical or
further financial position, financial performance, cash-flow
or liquidity.
For PLC non GAAP financial measures are governed by the
SEC regulation.
Non-GAAP financial measures may disaggregate different
aspect of a company’s operation or remove the effect of
large usual or unique transaction such as acquisition or
disposition.
19. Accounting as
an Ideology
Ideology can be described as a set of conscious or
unconscious ideas which make up one’s beliefs, goals,
expectations and motivations. So ideology is a
comprehensive normative vision.
Whereas Accounting is the measurement, processing and
communicating required financial information about an
economic entity with interested persons.
20. Grounded
theory
Grounded theory is a general methodology, a way of
thinking about and conceptualizing data. Grounded
theory is also a research methodology which operates
almost in a reserve fashion from social science research
in the positive tradition.
This theory was developed by two sociologists Barry
Gloser and Anslsm Straus in 1965.
21. Fields of
Grounded
Theory
In psychology, it is delayed used to understand the
role of the repetitive distance for the adult clients with
attached anxiety.
In sociology, it is used to discover the meaning of
spiritually in cancer patients.
In software engineering, grounded theory has been
used to study daily stand up meetings.
22. Theories of
Regulation
Any kind of regulation is generally assumed to be attained
by a given industry and is designed & operated primarily
for its benefits. There are two major categories of
regulation:
Public interest theories
The interest group or
capture theories
23. Public interest
theories
The theory was developed by A.C Pigou in 1932.
The theory assumes that the market is extremely fragile
and opt to operate very inefficiently.
Here regulation is supplied in response to the demand of
public for the correction of inefficient or equitable
market.
Purpose is social welfare.
Applied in regulated market.
The government is the neutral arbiter.
24. The interest
group or
capture
theories
Here regulation is supplied in response to the demand of
special interest group.
Applied in unregulated market.
Maximize the benefit of special group.
It fits the economic principles of Adam Smith.
25. Max Weber
Born: Kerl Emil Maximilion Weber was born on 21st April 1864 in
Erfurt, Saxany, Prussia.
Died: At the age of 56, he died at Munich, Bavaria, Germany on 14
June 1920.
Nationality: Prissia (1864-1871), German Empire (1871-1918),
Weihar Republic (1918-1920).
Work fields: Economics, Sociology, History , Law, Politics &
Philosophy.
26. Max Weber
Institution: University of Berlin, Friburg University of Vienna,
University of Munich.
Major Publications:
i. The protestant Ethic &Sprit of Capitalism.(1912)
ii. The city(1912)
iii. The Sociology of Religion(1922)
iv. General Economic History(1923)
v. The Theory of Social &Economic(1923)
27. Big Bath
Theory
The practice of making poor earnings of a company,
specially of a PLC appears worse than they really are. It
can be done through Witten off, prepaid expense and so
forth.
Manipulation of a company’s income statement to make
poor results look even worse to make future results
better . It is often implemented in a bad year for a
company to enhance the next years earning in an
artificial manner.
28. Window
dressing
A strategy used by mutual fund and other
portfolio managers near the year or quarter end to
improve the appearance of a fund’s performance
before presenting it to clients or shareholders. To
window dress near the end of the quarter the
securities are then reported as part of the fund’s
holidays.
29. Intellectual
Capital
Accounting
Intellectual capital is the sum of everything in a
company knows that gives it a competitive edge.
The term is used in academia in an attempt to
account for the value of intangible assets not listed
explicitly on a company’s balance sheet.
Intellectual capital is presented by brands, products
or competitive advantages.
It is considered as an asset ,and can broadly be
defined as the collection of information about
resources.
30. Human
Resource
Accounting
(HRA)
Human Assets Accounting or Man-power
Accounting
Process of identifying and measuring data about
human resources and communicating this
information to interested parties.”
It emphasized the need for measuring the cost of
recruitment, selection, and development of
human resources by an organization.
31. Definition of
Justice
According to Socrates, justice is like that to be just
(good) taken time, morality or to be unjust (evil) takes
shrewdness, deceptiveness and manipulation.
According to Plato, justice is not just something external
that is used in society, but it is an internal or even natural
or condition that can be found almost in everywhere.
In my opinion, justice is to develop a theory to be
applied to the development of the society and to develop
a process of distribution based on need, merit, or work
and to provide a rational justification for morality in
people's generic features focusing on freedom & well-
being and avoiding self-contradiction.
32. Accounting
means
accountability ??
Accounting is the measurement, processing and
communicating required financial information about an
economic entity with interested persons.
Whereas accountability is a virtue of some person which
is more similar with responsibility bearing, time
keeping, resolving the assigned task faithfully etc.
In modern business world, managers don’t perform their
duties properly, faithfully, and for the benefit of
shareholders . that creates agency problem, although
they are responsible for their any activities.
33. Rules of SEC
regarding PLC
financial
disclosures:
SEC regulation requires publicly owned
companies have to disclose certain type of
business and financial data on a regular basis to
the SEC.
Financial information to the potential investors
and to the stakeholders when the new securities
are issued to the general people although
expectation are made for small issue and private
placement.
34. Code of ethics
for ICAB &
ICMAB
The code of ethics is applicable to all accountants in
diverse fields, provide separate section for professional
accountants in public practice as well as in business.
The code is currently reviewed by a steering committee
appointed by the IFAC ethics committee.
Professional accountants(PA) must apply safeguard,
morality to eliminate threats to ensure that ethical
compliance is never compromised.
The Code establishes a regional model, with the
recommendation that no SAFA Member Body or firm
applies less stringent standards than those stated in the
Code unless the law, regulation or culture of a SAFA
Member Body provides otherwise.
35. Financial
Reporting
Act (FRA) in
Bangladesh-2015
To ensure transparency and accountability in financial
reporting.
To evaluate and regulate the performance of professional
accountants of ICAB & ICMAB.
To ensure the trustworthy and authenticity of the
published accounts of the public and private companies.
To ensure audit quality and setting standards, with a
view to developing strategic advice to the authenticity of
the authority and stakeholders on these issues.
Recognized by the cost and management audit of the
public entities.
ICAB & ICMAB supported the govt. to enact FRA.
36. Major elements
of FRA-2015
Section 2 (18) - Professional Accountant: Professional
Accountant means the member of ICAB and ICMAB.
Section 2 (19) - Professional Accountancy Institution:
Professional Accountancy institution means ICAB and
ICMAB.
Section 3- Establishment of Council: The Act aims at
inspiring the auditing and accounting system of the
country's financial institutions to international standards,
and under the Act, FRC comprising of 12 members will be
established, led by a Chairman appointed by the
Government. Moreover, the council will be a statutory body
with members from various government bodies, institutions
and professional groups.
37. Major elements
of FRA-2015
Section 7- The General Objectives of the Council: The
objectives of the FRC would be:
(a) To determine the code of ethics, standards of accounting
and auditing profession;
(b) To improve the quality of accountancy and audit services ;
(c) To improve the accounting and auditing profession;
(d) To ensure the highest quality of accounting and auditing
of listed auditors of the council;
(e) To enhance the credibility of financial reporting;
(f) To ensure the transparency and accountability of functions
of accounting and auditing profession; and
(g) To motivate for preparing the high quality reporting of
financial and nonfinancial information by public interest
entities.
38. Major elements
of FRA-2015
Section 16- The duties and Responsibilities of Chairman
of the Council: The duties and responsibilities of Chairman
of the council will be the following:
(a) Conducting administration of the council;
(b) Conducting and organizing effectively the activities
and matters determined by the council;
(c) Preparing annual budget and program; and
(d) Performing other duties given time to time by the
council.
39. Major elements
of FRA-2015
Section 21- Annual Report of the Council: Council shall
submit an annual report on its immediate preceding year’s
functions to the Government within 3 months from the
completion its fiscal year. The following matters shall be
included in annual report:
(a) Accounts of annual revenues and expenses and related
information;
(b) Details analysis of the functions of the council;
(c) Statement of the achieved goals of the council;
(d) Statement of the non-achieved goals with reasons;
(e) Statement of brief description of the members of the
council and their honorees and other facilities; and
(f) Statement of the attendance of members of meeting of
the council.
40. Major elements
of FRA-2015
Section 22-26- Divisions of the Council and Duties of the
Divisions: Under the Act, activities of the FRC will be done
through the following four serviceable divisions:
41. Division &
Duties of the
Division
a. Standards Setting Division:
(i) Preparing effective proposal of setting, renewal and
developing of financial reporting, value determination,
actuarial standards, auditing standards in accordance with
the rules and regulations of this act; and
(ii) Presenting this proposal in the council for approval.
b. Financial Reporting Monitoring Division:
(i) Monitoring, analyzing and identifying whether or
not any financial reporting standards, auditing standards,
code or guidelines of this act or any other act are complied
effectively by the public-interest oversight.
42. Division &
Duties of the
Division
c. Audit Practice Review Division:
(i) Monitoring of audit practice related functions of
professional accountancy firms;
(ii) Reviewing of audit practice of any firm that helps to
the randomly selected auditor or audit firm;
(iii) Determining whether or not the firm has complied
of audit practice code or auditing standards of this act;
(iv) Reviewing the control system of the related firm at
least once every 3 years; and
(v) Reviewing whether or not the related firm has taken
necessary steps for developing the accounting profession
keeping the professional quality.
43. Division &
Duties of the
Division
d. Enforcement Division:
(i) Considering the opinions and recommendations
given by the other division of the council or any other
subject matter relating failure or non-compliance of
standards of any acts given directly by any other
organizations to the council;
(ii) Recommending to take possible punishable action
for that failure or non-compliance; and
(iii) Informing it to the related parties.
44. Major elements
of FRA-2015
Section 28- Professional Behavior and Code of Ethics:
Council may set Professional behavior and code of ethics
for its members and employees with a view to establishing
professional behavior for their individual duties and
responsibilities.
Section 31- Registration with Financial Reporting
Council: After the establishment of the FRC, all auditors
and audit firms must register in the FRC. Without
registration, no auditor and audit firm will be able to
provide auditing service to any entity related with public
interest.
45. Major elements
of FRA-2015
Section 32- Application for Registration: For registration,
the auditor or audit firm needs to apply to the FRC. The
FRC will review the application and will provide the
registration to pursue the rules and guidelines.
Section 33- Cancellation and Fine of Registration: If
any auditor or any audit firm violates any provisions of the
act or any of its rules and guidelines, FRC may cancel or
suspend the registration and may fine as well.
46. Major elements
of FRA-2015
Section 40-43- Setting, Monitoring, Publishing of
Standards: Its key functions include the oversight of the
accounting and auditing standards setting processes for the
public and private sectors, providing strategic advice in
relation to the quality of auditing and advising the
authorities on these and related matters to the extent that
they affect the financial reporting framework in
Bangladesh.
Section 45- Monitoring of Financial Statements and
Annual Report: The FRC will be the sole watchdog to
monitor the functions of auditors and ensure clearness and
responsibility in accounting and auditing of financial
organizations.
47. Major elements
of FRA-2015
Section 46- Review of Audit Practice of the Auditors of
Public-Interest Oversight: Council, or any officer
authorized by it, in writing may review the audit practice of
a listed auditor and may investigate, examine and call all
records, documents, balance sheet, cash and bank balance,
mortgage, other assets etc. and may make query or call for
any information or explanation to any partner, employee or
agent.
Section 47- Enforcement of Compliance of Financial
Reporting and Auditing Standards: Council shall give
order to change or correct the financial statements under
financial reporting and auditing standards to the public-
interest oversight if it fails to comply with the financial
reporting and auditing standards, code or guideline.
48. Major elements
of FRA-2015
Section 48- Offence and Punishment: If anyone has got
registration as a auditor by breaking any condition of FRA
2015 or its section, sub-section, guidelines, standards or by
fraudulent way or by providing false information or breaks
any rule of this act, then it will be treated as an offence and
s/he will be punishable for imprisonment not exceeding 5
years or not exceeding taka 5, 00,000 (five lac) or both.
Section 54- Appeal Authority: Government may form an
appeal authority, published by gazette, for hearing appeal
under FRA 2015 and it will be called book keeping and
audit appeal authority.