Question

One page Executive summary about the Waste management Scandel of 1998. From an Audit stand point.

Answer 1

Summary of the Waste Management Scandal of 1998 from an Audit stand point:

Larry beck was founder of the Waste Management Inc. in 1894 in North America and it went public in 1971 by 1972

Scandal:

1. The officers of the Inc. extended the useful life of the garbage trucks by increasing the salvage values so as to avoid depreciation expense.

2. Many expenses were avoided by the officer like avoiding expenses related to decrease in the value of the landfills, discarded landfills development projects etc,.

3. They avoided $490 million for operating expenses by increasing environmental reserves.

4. They also moved false profits into the retained earnings by no fluctuation in the value of liabilities.

5. They assigned salvage value to the assets which previously had none so that they can increase residual value and avoid expenses like depreciation.

A lot more fraudulent activities are done by the officers of the Waste Management Inc. which is known as the Waste management Scandal of 1998.

This was occurred due to reach predetermined earnings by pushing up profits and pushing down foregoing expenses.

As the Inc. went public an auditor named Arthur Andersen was appointed for the auditing of the Inc.'s accounting books. But here the officer not only committing fraud by manipulating the accounting books but they also committed illegal activity by bribing the auditor rejecting the audit of their accounting books.

So here, the Inc.'s CEO and the officers who are responsible for committing fraudulent activities are to be removed from the so called public company and the auditor is to be also removed and appointment of other persons instead of these people should be done as they are in terms of greed. The various decision makers, investors, shareholders etc,. who depend on the reports are to be properly reported by appointing appropriate people who never turn into terms of greed.