Question

You just learned about WorldCom's accounting scandal that misled investors by artificially inflating net income and cash flow from operations.

What is another example of an accounting scandal you have heard of? Did the scandal involve the manipulation of the Statement of Cash Flows, or something else?

Answer 1

Yes, i have heard of Enron Corporation

Enron Corporation was a US vitality, products, and service organization based out of Houston, Texas. In one of the most dubious accounting scandal in the previous decade, it was found in 2001 that the organization had been utilizing accounting provisos to shroud billions of dollars of bad debt, while at the same time expanding the company's earnings. The scandal brought about investors losing over $74 billion as Enron's share price fallen from around $90 to under $1 inside a year.

A SEC examination uncovered that the organization's CEO, Jeff Skillings, and previous CEO, Ken Lay, had kept billions of dollars of debt off the organization's monetary record. Moreover, they had constrained the organization's auditing firm, Arthur Andersen, to ignore the scandal.

The two were sentenced, generally dependent on the declaration of previous Enron representative, Sherron Watkins. Nonetheless, Lay kicked the bucket before spending time in jail in jail. Jeff Skillings was condemned to 24 years in jail. The outrage prompted the chapter 11 of Enron and disintegration of Arthur Andersen.

Sometime later, the feelings were as disputable as the organization's breakdown had been stunning, as examiner Andrew Weissman prosecuted people, however the whole accounting firm of Arthur Andersen, viably making the organization bankrupt. It was little comfort to the 20,000 workers who had lost their positions when the conviction was later overturned.