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Accounting Fraud

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Accounting
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De Anza College
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Accounting Fraud
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Accounting fraud normally occurs through the influence of a company's managers and
more often can cause irreversible damage to the business. Accounting fraud may affect the
company's reputation. The last two decades saw the emergence of prominent accounting scandals
in the corporate world, where billions of dollars were lost in accounting. Various types of
accounting fraud include payment fraud, procurement fraud, commission fraud, and payroll
fraud. More often than not, accounting fraud is a result of greed and, in most cases
misappropriating the company's financial position (Jan, 2018). Managers misrepresent their
financial situation to appear attractive to their investors, creditors, and the general public.
Enron corporation, an energy industry, was on the spot whereby they used accounting
loopholes to misrepresent their true value. The company's managers, Jeff Skillings and Tony Lay
used unscrupulous techniques such as the Mark-to-Market strategy that overstated the company's
wealth. Mark-to-Market accounting often provides accurate financial information about a
company, but it may not be viable under financial distress. Enron managers used deceptive sales
practices where they termed the financial products offered as viable and of high value.
WorldCom, a telecommunication company based in Virginia, inflated the assets by
$11million. The managers of WorldCom underreported their line costs instead of recording them
as expenses. This scandal was the largest after Enron leading to 30000 jobs lost and $180 billion
losses. Satyam Computer Services was an Indian accounting firm that had inflated their revenue
by 1.5billion to appear financially healthy before their investors.
Advancement in technology depicts both sides of the sword since it contributes to more
fraudulent practices. At the same time, it has ensured the development of effective strategies that
prevent accounting fraud. The development of the Oxley Act has tended to create more strict

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1 Accounting Fraud Student’s Name Institutional Affiliation Course Name Professor’s Name Date 2 Accounting fraud normally occurs through the influence of a company's managers and more often can cause irreversible damage to the business. Accounting fraud may affect the company's reputation. The last two decades saw the emergence of prominent accounting scandals in the corporate world, where billions of dollars were lost in accounting. Various types of accounting fraud include payment fraud, procurement fraud, commission fraud, and payroll fraud. More often than not, accounting fraud is a result of greed and, in most cases misappropriating the company's financial position (Jan, 2018). Managers misrepresent their financial situation to appear attractive to their investors, creditors, and the general public. Enron corporation, an energy industry, was on the spot whereby they used accounting loopholes to misrepresent their true value. The company's managers, Jeff Skillings and Tony Lay used unscrupulous techniques such as the Mark-to-Market strategy that overstated the company's wealth. Mark-to-Market accounting often provides accurate financial information about a company, but ...
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